Submerged economy

Author: Ojo Harrison Oluwatobi

Submerged economy is a type of economy that the wealth and resources of a country is covered/ buried under the negative section of the economy.  The GDP(Gross domestic profit) plays a very big impact, because this is where the value of output produced with the  a country over a twelve-month period.   

The rest of Spain’s economy is either still or in debility, this new report shows that for GDP in 2012 24.6%, in 2008 6.8% higher.  

This report by Spain's Inland Revenue department titled The Cost of the Submerged Economy: Increased Fraud during the Crisis claims the black economy is valued at €253bn (£208bn) – €60bn more than in 2008.

Meanwhile, figures shows that Spain's GDP increased by 0.3% in the last quarter of the year 2013, up from 0.1% in the third quarter, this symbolises the prime rise in Spanish GDP since the start of 2003.

The Inland Revenue says the submerged economy has grew quickly in those sections impacted by unemployment and the eruption housing bubble, such as Andalusia, the Canaries, Extremadura and Castilla-La Mancha. The numbers for Extremadura, where unemployment stands above 30%, is 31.1%.

The report comments on the "serious moral problem when it comes to paying taxes", a situation that has put Spain's black economy high above Germany (13.1%), France (10.8%) and the UK (10.1%), although the rate in Italy, Portugal and Greece is closer to Spain's.

Shadow economic activity in Greece is equivalent to almost a quarter of national output, a study by the London-based Institute of Economic Affairs found. The research found that Greece's shadow economy was equivalent to 24% of GDP last year, which was one of the highest rates in Europe but lower than a decade earlier when it surpassed 28%.

Although unemployment stands at around 26%, it is an open secret that this figure disguises the large numbers working in the submerged economy.

In spite of the high levels of fraud, there is only one Spanish tax inspector for every 1,928 taxpayers, compared with 860 in France and 729 in Germany.