The informal economy refers to trade through distribution channels that are not approved from the original maker. For the activities of the informal economy it is characteristic that they are happening far away from the state. Activities that should be mention, by its characteristics, in informal economy are applied to activities that natural or legal persons are taking in order to avoid paying taxes, bypassing legal provisions, non-compliance with international accounting standards when publishing financial statements and activities bonded with money transactions. Goal of this work is to analyze informal economy in Republic of Croatia for the 2016-2019 period and to present a comparative view of the surrounding countries, specifically, the countries of the Western Balkans. The paper also provides an overview of different methods for estimating the size of the informal economy. There are four aspect of informal economy analyzed: size, causes, results and measures to suppress. Comparing Croatia with countries of West Balkan it is possible to establish that informal economy is a quit challenge. In mentioned countries informal economy is relatively high, which leaves negative results on economy and society as a whole. In work are also analyzed specific measures to informal economy suppression, for instance tax policies changes, institution strengthening and promoting informal economy awareness.