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U.S. Shadow Economy Smaller than Global Counterparts
June 29, 2017 | PRNewswireEstimated reading time: 1 minute
The United States has the smallest "shadow economy"—the production of and trade in legal goods and services that are deliberately concealed from public authorities—of 28 surveyed nations, and it is set to drop even further by 2025, according to a new study from ACCA (the Association of Chartered Certified Accountants).
Globally, the shadow economy is estimated to represent an average 22.5% of GDP at the end of this year. In Canada, the forecast shadow economy is expected to represent an average 14.15% of GDP in 2017 (and is expected to drop to 13.8% by 2025); the region with the expected highest percent of the shadow economy is Azerbaijan, at 66.12% in 2017.
"While it is great to see that the U.S. has a relatively small, and declining, shadow economy, its presence does throw up considerable practical and ethical issues for both business and government," said Faye Chua, head of business insights at ACCA.
In the U.S., a growing GDP and increased employment levels may have contributed to this decline in shadow economy activity: workers have more opportunities in the legitimate sector and are less likely to fall into the shadows, Chua added.
"Government, business and society can take steps to restrict the shadow economy, ensuring all workers and businesses retain the rights associated with the legal trade of goods and services," added Warner Johnston, head of ACCA USA. "To continue seeing a decline in the U.S. shadow economy, the government needs to invest in creating opportunities for the most marginalized in society."
The report also emphasizes the role the accountancy profession plays in monitoring of such activity and ensuring compliance with regulatory standards among companies and clients.
About ACCA
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. We support our 188,000 members and 480,000 students in 178 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of 100 offices and centres and more than 7,110 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence.
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