Grey economy seen increasing to 18.3 pct of GDP in 2021 - analysts

According to Poland's Institute of Forecasts and Economic Analyses (IPAG), the grey economy's share in Poland's GDP increased to 18.3 percent in 2021, from 18 percent in 2020, IPAG's vice-president announced on Tuesday.

IPAG estimates the share of the value of the grey economy in Poland for 2021 at a total of PLN 469 billion (EUR 101.56 billion), a little more than in 2020 when it was around PLN 447 billion (EUR 96.79 billion). In 2019, according to IPAG, its value was PLN 419 billion (EUR 90.72 billion).

Jacek Fundowicz told a video conference that the increase of value of goods and services processed in the grey economy was related to the coronavirus pandemic.

According to IPAG's latest report, 'Grey Economy 2021,' the decreased GDP growth, freezing of the economy in many sectors and the reduced mobility of people contributed to lower profits for businesses and caused the need to seek savings, such as moving some or all activities to the grey economy.

The IPAG report states that cigarette smuggling and their illegal production represent one of three key elements of the grey economy as estimated by the Central Statistical Office.

IPAG said that the value of smuggling cigarettes to Poland stood at PLN 2.2 billion (EUR 476 million) in 2020, and the value of illegal production reached PLN 0.5 billion (EUR 108.26 million). A year earlier, the figures were PLN 2.8 billion (EUR 606 million) and PLN 0.8 billion (EUR 173.22 million) respectively.

Fundowicz said that border closures during the pandemic and reduced market trading were the reason for the drop in the smuggling and illegal production of cigarettes.

He also added that the coronavirus pandemic affected the employment of foreigners in Poland. Following a fall in inflows of foreigners in the first months of 2020, since July a growth has been seen. Despite this, the number of foreigners employed in Poland in 2020 fell, including those employed in the grey economy.

IPAG estimates that last year, 752,000 foreigners worked in the grey economy, while a year earlier the number was 812,000.