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Citadele Index: grey economy has declined in Latvia’s construction sector

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Compared to last year, the proportion of construction businesses that point to large and more likely large presence of grey economy in the country’s construction sector has dropped to 12%, according to information from the latest Citadele Index.

Respondents also often mentioned that the grey economy continues to decline (37% believe this). Not a single respondent believes grey economy is on a rise in their represented sector. 32% of respondents in the trade sector pointed towards a large or more likely large presence of grey economy in the construction sector.

13% of interviewed businesses believe grey economy is not present in their industry. 53% of interviewed businessmen said the presence of grey economy is either small or very small. 24% of Latvian businessmen believe grey economy in their industry is considerable. 31% of interviewed businessmen believe grey economy is currently declining in their sector, 8% say it is increasing, and 42% say it remains unchanged.

«It is good to see changes in Latvia’s construction sector. This is associated with increased accessibility of European funding, which is a good stimulus for turnover of larger amounts of money and development of clean business practices,» Citadele Bank’s economist Mārtiņš Āboliņš comments the situation. «Compared to the beginning of 2017, the proportion of grey economy in Latvia has declined. The fact that a quarter of businessmen still feel pressure from unfair competition is a strong signal, however,» the economist adds.

Businesses in Latgale suffer from unfair deals tax avoidance more than businesses in other parts of Latvia. 36% of interviewed businesses there believe the proportion of grey economy is either large or more likely large. Businesses in Zemgale seem to have the least problems with dishonest competitors. 18% of businessmen in Zemgale believe grey economy proportion is large. The proportion of similarly-minded businessmen in Riga is 22%.


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