Ooni Koda
  1. Home
  2. /
  3. Newsfeed
  4. /
  5. EY: Romania's shadow economy on downward trend in...

EY: Romania's shadow economy on downward trend in recent years, accounts for around one eighth of GDP

April 29, 2025

Romania's shadow economy has been on a downward trend in recent years, reaching 13.1% of GDP in 2023, down from 31.3% of GDP in 2000, 19.5% in 2013, or 15.1% in 2019, according to data from Ernst & Young consulting company."Over the last 25 years, estimates have been put forward about the size of Romania's shadow economy, both officially and unofficially, estimates that have ranged up to 30-40% of GDP. The problem with these figures has always been the source and quality of the information on the basis of which a result as close to reality as possible could be obtained, which is precisely why we have always talked about estimates. What is certain is that, at the moment, technological advances and a rapid evolution of European and Romanian tax legislation have forced the black and gray economy to retreat. Romania's shadow economy accounts for around one eightieth of GDP, according to the recently released EY study "Shadow Economy Exposed: Estimates for the World and Policy Paths". The good news is that its share of the total is decreasing from one year to the next, as part of a trend of over two decades," explained Alex Milcev, Partner, Tax & Law Leader, EY Romania, in a company press release.According to him, the global concern of decision-makers to find the best ways to combat and mitigate the underground economy is not new, but in recent years it has intensified, and the causes are multiple, from the budgetary fallout of the 2008-2009 financial crisis to the costs of the pandemic and the current geo-political uncertainty.The EY research looked at 131 countries over a 23-year period (2000-2023), of which 119 have made remarkable progress in reducing the share of the shadow economy, especially in the last five years, by almost 6.7% of GDP. The study shows that the share of the shadow economy in total global GDP is expected to reach 11.8% in 2023 (or 19.8% if we take the arithmetic average of individual country estimates)."In this context, the share attributed to Romania does not look particularly special, but, admittedly, with this level, Romania remains at the bottom of the EU ranking," the source said.According to the EY study, the shadow economy (the unobserved, unreported or unregistered economy) comprises various types of unreported economic activity (GDP) of registered and unregistered enterprises and is responsible for only a part (often significant, however) of the total fiscal deficit.The estimate for Romania is 13.1% of GDP for 2023, i.e. only one percentage point more than the global average."The sector of the national underground economy exists and cannot be denied, but the interesting part is its size, now determined according to clear criteria, taken into account for all countries analyzed. Thus, the EY Global Study indicates that in 2000 the shadow economy in Romania was estimated at 31.3% of GDP, in 2013 at 19.5%, and in 2019 it reached 15.1%. The long-term downward trend is clear and the speed of reduction is naturally faster than in other developed countries (because it starts from a more precarious base)," the press release further shows.In this context, the EY report includes several key recommendations for decision-makers to reduce the shadow economy. The first of the recommendations is to strengthen taxpayer confidence in public administration and the tax system, with the consultants showing that tax compliance increases when taxpayers trust that their taxes are spent wisely and that everyone pays their fair share.Another recommendation is to formalize informal businesses, and authorities should make it easier and more advantageous for businesses to register and operate legally.Leveraging on technology to increase tax compliance and better detect non-compliance is another EY proposal as well as making more effective use of third party information: cross-checking financial system data, labor market information, public and private platforms and databases, etc.At the same time, efforts need to be coordinated across government agencies and even across borders."The direction for Romania is the right one and it is time for the perception of the share of the shadow economy in the National Gross Domestic Product to be changed on the basis of a study that shows that, in fact, the reality on the ground is better than the subjective image. However, we still have a long way to go to reach the EU average and to remember that the reduction of the underground economy is not only a matter of law enforcement by the authorities, but also of ensuring fair competition and a healthy business environment," maintained the representative of the consulting company.

Read in full - click here
Cluj-Napoca’s UNTOLD 2025 festival brought EUR 120 mln boost to local economy, organizers say

UNTOLD X, the 10th anniversary edition of Romania’s largest music festival, generated more than EUR 120 million for the local economy in Cluj-Napoca and surrounding counties, according to figures released after the event. Over 470,000 people attended the four-day festival, filling hotels and restaurants to capacity and creating a significant boost for local businesses, the […]

English tourist dies on trail in Romania’s Bucegi Mountains

A 70-year-old English tourist died on Saturday, August 16, due to a cardiorespiratory arrest while on a trail in Romania's touristic Bucegi Mountains.  Emergency crews requested the intervention of a helicopter from the Brașov Air Operations Point in the case, helping them arrive at the scene in about 15 minutes. Once there, medical crews performed […]

Major drug bust: Romanian police seize EUR 3.5 mln worth of cocaine hidden in camper van

Police have seized EUR 3.5 million worth of cocaine found hidden in a camper van last week and arrested two Serbian citizens suspected of trafficking the drugs through Romania. The operation, carried out by the Organized Crime Directorate – Anti-Drug Service together with DIICOT prosecutors, targeted an international network using the Balkan route to smuggle […]

Romanian Environmental Guard inspectors to use bodycams and drones in field operations

Romania’s National Environmental Guard will begin using body cameras and drones in field operations after the government approved new regulations making the equipment operational, the Ministry of Environment announced. The devices, purchased through the National Recovery and Resilience Plan (PNRR), are intended to strengthen enforcement and improve transparency in environmental inspections. Environment minister Diana Buzoianu […]

Romanian Katia Pascariu receives Boccalino d’Oro Best Actress award at Locarno Film Festival

Actress Katia Pascariu was awarded at the Locarno International Film Festival for her role in the film “Sorella di Clausura” directed by Ivana Mladenović. The Romanian actress was given the Boccalino d’Oro Best Actress award, offered by the Jury of Independent Critics.  The award has a history of 25 years, and was given to Pascariu […]

Buying pre-loved clothes is also new cool in Romania

Sales of second-hand clothes, shoes, and other products have doubled in the last five years, reaching RON 1 billion (EUR 200 million), according to statistical data provided by the Bridge to Information platform based on official statistics, as quoted by Ziarul Financiar. The market may...