Romania's underground economy went down significantly in the last ten years, mostly due to preparations for joining the European Union, the global financial crisis and the increase in electronic payments, according to Visa Europe. The country's illegitimate economy is estimated at some EUR 39.6 billion for 2013, a drop of 3.5 percent compared to 2008 and of 15 percent on 2003. Despite the drop, Romania still ranks second in Europe, as the weight of the underground economy in the overall GDP is of 28 percent. The same weight is found in Croatia, Estonia and Lithuania. Bulgaria ranks first, with a 31 percent of GDP weighting for its shadow economy, according to Visa Europe's recent report, The Shadow Economy in Europe.

Electronic payment systems clearly help reduce the underground economy, said Catalin Cretu, general manager for Romania with Visa Europe. However, Romania still lags behind in Europe when it comes to the number of electronic transactions a year, with only 16, compared to the EU average of 180, per inhabitant a year. These include bank transfers, as well as direct debit and transactions with cards.

The underground economy in Europe is estimated at EUR 2.1 trillion, or 18.5 percent of the continent's economy, and according to Visa, the wider use of electronic payments would trigger a 10 percent drop in the underground economy, or some EUR 200 billion.

editor@romania-insider.com