Hungary: Illegal activity accounts for 1 percent of GDP

Should we economists have two figures for gross domestic products with an official number an unofficial one including the underground economy? You have to wonder reading some of the emerging markets economic data.

From Bloomberg:

Prostitution and the illegal drug trade boosted Hungary’s economic output figures for the last 14 years after the government revised the way it calculates gross domestic product.

The two activities account for about 1 percent of GDP, statistician Peter Szabo said in an interview in Budapest today. Their inclusion “significantly” boosted output figures going back to 1995, he said.

You can add piracy and other items to the underground economy. On one hand, official statistics understate economic data. In addition, better accounting of the underground economy—not to mention analytics—could at least shed light on better policy responses to these issues.