The undeclared economy -- firms and individuals avoiding tax by failing to declare incomes and revenue -- now makes up about 20 percent of Russia's gross domestic product, said Yury Yurkov, head of the State Statistics Committee.
The statisticians said they added 40 percent to the figures they received for goods and services to take account of the shadow or "gray" economy.
"We are pitifully ahead of the whole planet in this," Yurkov told a news conference. "In Italy, where the 'gray' market is the most developed, the figure is 13 percent."
He added that Russian output figures did not include criminal activity but took account of hidden volumes of sales, companies working without licenses and private individuals involved in unlicensed imports.
Russians took about $500 million out of the country in September, most of it to buy goods which were not declared, according to customs committee figures, Yurkov said.
Russia's GDP in January-October was 85 percent of what it was in the same period last year. Services, where the shadow sector is becoming increasingly important, accounted for 55 percent of GDP, said Vladimir Sokolin, deputy head of the committee.
The increasing size of the shadow economy meant Russia was forced to develop a whole new system to estimate the economy's size.
"There are about 2 million firms on the market ... and you cannot just tell them all to give us information. So we have to make our estimates based on alternative information," Yurkov said.
In Soviet times, statistics collection was a key part of centralized control over enterprises. But Yurkov said his committee now sought to obtain information to give society an idea of current trends in the economy.
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