Illegal activities contribute some EUR 400 mln to Romania’s GDP

The contribution of illegal activities, such as smuggling cigarettes and alcohol, prostitution and drug use, to Romania’s GDP increased by 1% in 2013 compared to 2012, to some EUR 407 million, according to official data released by the National Statistics Institute (INS). Indirect revenues from prostitution went down by 26% last year, to EUR 40 million, while the other segments increased, according to estimations. Drug use indirectly generated some EUR 170 million in terms of revenues for the GDP, 6.2% more than in 2012, while smuggling activities with cigarettes and alcohol generated some EUR 197 million, INS data shows. INS makes estimates of these revenues based on formulas recommended by the European statistics institute Eurostat. For example, in estimating revenues from prostitution, INS uses the assumption that prostitutes work on average 43 weeks each year. The number of prostitutes is multiplied by the average price of the service and by the average number of clients in the given period. INS even calculates the value of exports from prostitution, which is represented by the revenues generated by foreign tourists who come to Romania and use such services. But, according to INS, the export is insignificant. The overall indirect contribution of these illegal activities to the country’s GDP was less than 0.3%. Romania's GDP was EUR 142 billion in 2013. Although these activities are illegal and therefore sanctioned by the law, they generate revenues for those involved in these activities. These revenues enter the economy via consumption. editor@romania-insider.com