Latvian shadow economy contract 1 pct over year: survey

RIGA, Dec. 13 (Xinhua) -- Latvia's unreported business activity has decreased by one percent from last year, but still makes up 20 to 23 percent of the Baltic country's gross domestic product (GDP), according to a new survey.

The authors of the survey -- conducted by the Stockholm School of Economics in Riga (SSE Riga) and the Latvian Chamber of Commerce and Industry -- noted that since its accession to the Organization for Economic Co-operation and Development (OECD), Latvia is no longer seen as a country posing significant money-laundering risks. Still, corruption remains the main problem in the context of Latvia's shadow economy, SSE Riga researchers concluded.

"We know that businesses pay large sums in bribes. They can reach 6.5 percent of a deal's total value, so it is quite a lot...Around 16 percent of entrepreneurs who have been involved in legal disputes admitted that they had been involved in corruption as participants of such court proceedings," said Arnis Sauka, a researcher at SSR Riga.

Contraband of excised goods is also a major problem fueling Latvia's shadow economy as demand for such illegal goods in Latvia remains strong.

Stressing the need to continue the fight against unreported business activity on a national level, the Latvian Chamber of Commerce and Industry has set a goal to reduce the share of the shadow economy to 10 percent of GDP in the coming years. Enditem