Bulgaria with Third Largest Gray Economy in EU

Bulgaria has the third largest gray economy as a percentage of the gross domestic product among European Union member states, a study shows.

This study, performed by AT Kearney agency for VISA Europe, examines the structure of the shadow economy and ways to reduce it.

Although the exact size of the gray economy is difficult to ascertain, in Europe it is believed to be about EUR 1,8 trillion, the study says.

In Germany and France, this economy is about one-eighth the size of the countries' official GDP. In less developed Eastern European countries it comes close to 40% of GDP - Latvia (39%), Estonia (38%) and Bulgaria (37%).

The analysis cites another study, according to which 48% of the workforce receives a portion of their wages in cash, unofficially, to avoid taxation.

AT Kearney agency study has found a strong correlation between the prevalence of electronic payments in a country and its shadow economy.

Countries with high levels of electronic payment usage, such as the United Kingdom and the Netherlands, have smaller shadow economies than countries with minimal levels of electronic payments, such as Bulgaria and Romania.