Informal Economy Reaches 22% of GDP

With a new methodology, the Banco de Guatemala determined that the value of the informal economy already adds up to the equivalent of 22% of the Gross Domestic Product.

Friday, December 20, 2019

The new calculation used by the Banco de Guatemala (Banguat) to measure national production now includes the measurement of the informal economy, mainly its participation in productive activity.

Prensalibre.com reviews that "... Sergio Recinos, president of Banguat and JM, explained this Thursday that through the System of National Accounts (SNA) and the current methodology, informal activity and added value are measured, that is, their weight in the economy."

"... However, he clarified that it is mentioned that the informal sector is higher and that it is related to employment. From the point of view of employment, unfortunately it is 70%," he said. Recinos said that by including the informal economy, there will be greater coverage of production and better statistics."

"... The economy grew this year by 3.5% and used the SNA, which measures other productive activities, including the informal economy."


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More on this topic

Labor Tax Stifles Formal Employment

October 2017

The higher the percentage of wages paid by employers, the less formal employment will be generated, particularly affecting unemployed young people and distorting the economy by rewarding informality.

This is notorious in Costa Rica, where despite sustained growth of the economy in recent years, unemployment remains at around 10% of the economically active population, and informality represents around 40% of employment.

Guatemala: Informal Economy Tax Discarded

February 2014

Among other criticisms it has been noted that the tax would encourage established companies to move towards informality.

The executive has rejected the proposal that individuals and organizations who operate informally pay a $20 annual tax, which was intended to expand the tax base.

Guatemala: Tax to Regulate Informal Economy

February 2014

The Executive has proposed that individuals and business organizations that operate informally pay a single tribute of $20 a year.  

The Guatemalan vice president, Roxana Baldetti proposed formalizing the informal economy through payment of a single annual tax of $20 which would apply to micro, small and medium enterprises operating in this segment of the economy.

Panama: Informal Sector of the Economy Decreases

July 2012

In 2006 there were 957.017 insured people and Panama in 2011, the number exceeded 1,2 million, indicating that the informal sector of the economy has declined.

From a press release from the Ministry of Economy and Finance:

According to the publication "Panama in Figures", from the National Institute of Statistics and Census, in 2006 in Panama had 957.017 registered for social security and for 2011, the number exceeded 1,2 million, indicating that the informal sector of the economy has declined . This is a great reference for estimating the level of formality of the economy, because as people are insured, their working relationship and commercial operations are formalized, said the Director of Economic and Social Analysis at the Ministry of Economy and Finance, Roger Alvarado.

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