Black Market Swallowing 20% of Russia’s Economy: Report

The size of Russia’s shadow economy was equal to 20 percent of the GDP last year, business newspaper Vedomosti reported Friday, citing data from state financial watchdog Rosfinmonitoring.

The watchdog recorded 20.7 trillion rubles ($315.9 billion) in undeclared imports and income taxes, as well as under-the-table salaries and other suspicious transactions in 2018. That amounts to just under 20 percent of Russia’s 103.6 trillion ruble GDP, the news outlet said Friday.

The value of the shadow economy rose slightly from 2017 when it was estimated at 18.9 trillion rubles. Meanwhile, in 2016, the shadow economy was estimated as having a value of 24.3 trillion rubles, or 28 percent of GDP, RBC said.

The 20.7 trillion ruble shadow economy last year was bigger than the 18 trillion rubles allocated to total federal budget spending in 2019.

Almost 15 million Russians worked off the books in 2018 with a total illicit payroll of around 11 trillion rubles, the Rosfinmonitoring report said.

According to the document, illegal economic agents are actively using fictitious foreign economic activity to bring criminal proceeds abroad.

“Funds are transferred abroad according to organized complex schemes, using for the stratification and transit of financial flows a multitude of accounts of one-day firms opened with various banks. Transfers abroad are mainly carried out under the guise of foreign trade transactions for the supply of goods or the sale and purchase of securities,” the report added.