Economy of Andorra

Economy of Andorra
The economy of Andorra is a developed and free market economy driven by finance, retail, and tourism. The country's gross domestic product (GDP) was US$5.70 billion in 2023. Attractive for shoppers from France and Spain as a free port, Andorra also has developed active summer and winter tourist resorts. With some 270 hotels and 400 restaurants, as well as many shops, the tourist trade employs a growing portion of the domestic labour force. An estimated 13 million tourists visit annually.
There is a fairly active trade in consumer goods, including imported manufactured items, which, because they are duty-free, are less expensive in Andorra than in neighboring countries. Andorra's duty-free status also has had a significant effect on the controversy concerning its relationship with the European Union (EU). Its negotiations on duty-free status and relationship with the EU began in 1987, soon after Spain joined. An agreement that went into effect in July 1991 sets duty-free quotas and places limits on certain items – mainly milk products, tobacco products and alcoholic beverages. Andorra is permitted to maintain price differences from other EU countries, and visitors enjoy limited duty-free allowances.
The results of Andorra's elections thus far indicate that many support the government's reform initiatives and believe the country must, to some degree, integrate into the European Union in order to continue to enjoy its prosperity. Although arable land comprises less than 2% of the country, agriculture was the mainstay of the Andorran economy until the upsurge in tourism. Sheep raising has been the principal agricultural activity, but tobacco growing is lucrative. Most of Andorra's food is imported.
In addition to handicrafts, manufacturing includes cigars, cigarettes and furniture for domestic and export markets. A hydroelectric plant at Les Escaldes, with a capacity of 26.5 megawatts, provides 40% of Andorra's electricity; Spain provides the rest.
Overview
Tourism is the mainstay of Andorra's economy, accounting for roughly 80% of GDP. An estimated 9 million tourists visit annually, attracted by Andorra's duty-free status and by its summer and winter resorts. Andorra's comparative advantage has recently eroded as the economies of neighboring France and Spain have been opened up, providing broader availability of goods and lower tariffs. The banking sector, with its "tax haven" status, also contributes substantially to the economy. Agricultural production is limited by a scarcity of arable land, and most food has to be imported. The principal livestock activity is sheep raising. Manufacturing consists mainly of cigarettes, cigars and furniture. Andorra is a member of the EU Customs Union and is treated as an EU member for trade in manufactured goods (no tariffs).
Statistics
GDP: purchasing power parity - US$3.327 billion (2015)
country comparison to the world: 190
GDP - real growth rate: 8.95% (2015 est.)
country comparison to the world: 132
GDP - per capita: purchasing power parity - US$49,900 (2015)
country comparison to the world: 29
GDP - composition by sector:
(2015 est.)agriculture: 11.9%
industry: 33.6%
services: 54.5%
Population below poverty line: N/A
Household income or consumption by percentage share:
lowest 10%: N/A
highest 10%: N/A
Inflation rate (consumer prices):
-0.9% (2015 est.)
country comparison to the world: 225
Labor force: 42,230 (2007)
country comparison to the world: 185
Labor force - by occupation:
agriculture 0.3%, industry 20.8%, services 79% (2007)
Unemployment rate: 3.7%
country comparison to the world: 183
Budget:
revenues: US$1.872 billion
expenditures: US$2.06 billion (2016)
Industries:
tourism (particularly skiing), banking, timber, furniture
Industrial production growth rate: -3.9% (2020 est.)
country comparison to the world: 184
Electricity - production: N/A
Electricity - production by source:
fossil fuel: 0%
hydro: 40%
nuclear: 0%
other: 60% imported from Spain
Electricity - consumption: N/A
Electricity - exports: N/A
Electricity - imports: N/A ; note - imports electricity from Spain and France; Andorra generates a small amount of hydropower
Agriculture - products: small quantities of rye, wheat, barley, oats, vegetables, tobacco, sheep, cattle
Exports: US$1.842 billion f.o.b. (2020 est.)
country comparison to the world: 163
Exports - commodities: integrated circuits, dental fitting supplies, cars, gold, essential oils (2021)
Exports - partners: Spain 40%, France 19%, United States 11%, Mauritania 5% (2019)
Imports: US$1.727 billion (2020 est.)
country comparison to the world: 178
Imports - commodities: cars, refined petroleum, perfumes, shaving products, liquors (2019)
Imports - partners: Spain 71%, France 17% (2019)
Debt - external: $0 (2016)
Economic aid - recipient: none
Currency: Euros have replaced the French franc and the Spanish peseta.
Exchange rates: euros per US dollar - 0.845 (2021), 0.6827 (2008), 0.7306 (2007), 0.7964 (2006), 0.8041 (2005), 0.8054 (2004), 0.886 (2003), 1.0626 (2002), 1.1175 (2001), 0.9867 (January 2000), 0.9386 (1999)
Fiscal year:
calendar year
Companies
In 2022, the sector with the highest number of companies registered in Andorra is Services with 2,515 companies followed by Retail Trade and Wholesale Trade with 1,157 and 1,144 companies respectively.
See also
Tourism in Andorra
References
Andorra
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