Shadow Economy Index for the Baltic Countries

According to the study, the size of the shadow economy in Latvia increased slightly in 2025, reaching 21.8% of GDP, which is 0.4 percentage points higher than in 2024.

An increase was also observed in Estonia, where the shadow economy grew by 1.4 percentage points to 20.8% of GDP.

In contrast, Lithuania recorded a decline in the size of its shadow economy, which fell to 23.6% of GDP, representing a decrease of 1.1 percentage points compared to the previous year.

Commenting on the findings, SSE Riga professors and study authors Tālis Putniņš and Arnis Sauka noted: “Overall, the data indicate that the convergence in the size of the shadow economy across all three Baltic States continues, maintaining the trend observed in the previous year. Lithuania still has the highest share of the shadow economy, although it is declining, while Estonia has the lowest share, despite an increase in its shadow economy. Furthermore, Estonia recorded its highest level of the shadow economy in 2025 since measurements began in the Baltic countries in 2009.”

The Shadow Economy Index has been calculated annually across the Baltic countries since 2009 and remains one of the region’s most comprehensive measures of unreported economic activity. 

This research is funded by the Latvian Council of Science, project Unequal Shadows: Informality, Kinship and Tax Morale in Latvia, project number lzp-2025/1-0346.