Shining a light on the informal economy: Ensuring everything that counts is counted

Abstract

This paper emphasizes the importance of accurately measuring informal economic activity to support inclusive and sustainable economic growth policies. A major advance in this area is the integration of internationally agreed labor-statistical definitions of informality into the System of National Accounts 2025 (2025 SNA) and the seventh edition of the Balance of Payments and International Investment Positions Manual (BPM7). For the first time, these standards enable consistent measurement of informal production, employment, and external-sector activities within macroeconomic accounts. Recognizing informal activities ensures that the contributions of millions of workers and enterprises are properly reflected in economic analysis, thereby supporting more equitable policy responses and fostering development that leaves no one behind. The paper details recent methodological progress in capturing informal economic activity through integrated frameworks that link informal economic production from both enterprise and employment perspectives. It highlights ongoing challenges, including data gaps, inconsistent national practices, and limited capacity in many countries. Improved statistics can inform a range of policy applications, from poverty reduction and labor market regulation to macroeconomic planning. The paper concludes by identifying priorities for further research, including incorporating data into mainstream economic indicators and improving comparability of informality statistics across countries.