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Andorra: Economy#

Tourism, retail sales, and finance are the mainstays of Andorra's tiny, well-to-do economy, accounting for more than three-quarters of GDP. Andorra's duty-free status for some products and its summer and winter resorts attract millions of visitors annually, although the economic downturn in neighboring countries has curtailed the number of tourists. Agricultural production is limited - only about 5% of the land is arable - and most food has to be imported, making the economy vulnerable to changes in fuel and food prices. The principal livestock is sheep. Manufacturing output and exports consist mainly of perfumes and cosmetic products, products of the printing industry, electrical machinery and equipment, clothing, tobacco products, 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) and as a non-EU member for agricultural products. Andorra uses the euro and is effectively subject to the monetary policy of the European Central Bank. Andorra's comparative advantage as a tax haven eroded when the borders of neighboring France and Spain opened; its bank secrecy laws have been relaxed under pressure from the EU and OECD.

Slower growth in Spain and France has dimmed Andorra's economic prospects. Since 2010, a drop in tourism contributed to a contraction in GDP and a sharp deterioration of public finances, prompting the government to begin implementing several austerity measures to reduce the budget deficit, including levying a special corporate tax. The Government is also planning to institute an income tax at the behest of the Organization for Economic Cooperation and Development. The new tax will apply to anyone who lives in the principality for at least 183 days in a calendar year. The first $30,000 of income will be tax free, with the next $20,000 taxed at 5%. The balance of income exceeding the initial $50,000 will be taxed at 10%, which is still less than in most West European countries. Andorra’s Government also relaxed its residency and investment laws in 2012 to make the country more attractive to foreign investors. A person now must spend 90 days a year in the principality to qualify for residency, compared with the previous 180-day requirement. Foreigners now have the same property ownership rights as citizens. In addition, three new categories of residency permits were introduced. Anyone who is retired or at least not working in Andorra can obtain a permit in the first category by making a financial investment in the country of at least €400,000, which can include a property purchase.

Economic Facts#

GDP (purchasing power parity)$3.163 billion (2012 est.)
$3.214 billion (2011 est.)
$3.227 billion (2010 est.)
note: data are in 2012 US dollars
GDP (official exchange rate)$4.8 billion (2012 est.)
GDP - real growth rate-1.6% (2012 est.)
-0.4% (2011 est.)
-1.9% (2010 est.)
GDP - per capita (PPP)$37,200 (2011 est.)
$37,700 (2010 est.)
$37,900 (2009 est.)
GDP - composition, by sector of originagriculture: 14%
industry: 79%
services: 6% (2011 est.)
Agriculture - productssmall quantities of rye, wheat, barley, oats, vegetables, tobacco; sheep, cattle
Industriestourism (particularly skiing), banking, timber, furniture
Industrial production growth rateNA%
Labor force36,060 (2012)
Labor force - by occupationagriculture: 0.4%
industry: 4.7%
services: 94.9% (2010)
Unemployment rate4% (2012 est.)
1.9% (2011 est.)
Population below poverty lineNA%
Household income or consumption by percentage sharelowest 10%: NA%
highest 10%: NA%
Budgetrevenues: $1.029 billion
expenditures: $1.041 billion (2012)
Taxes and other revenues21.4% of GDP (2012)
Budget surplus (+) or deficit (-)-0.3% of GDP (2012)
Public debt41.1% of GDP (2012)
37.7% of GDP (2011)
Fiscal yearcalendar year
Inflation rate (consumer prices)1.1% (2012 est.)
-2.5% (2011 est.)
Exports$70 million (2012 est.)
$72 million (2011 est.)
Exports - commoditiestobacco products, furniture
Imports$1.43 billion (2012 est.)
$1.501 billion (2011 est.)
Imports - commoditiesconsumer goods, food, fuel, electricity
Debt - external$NA
Exchange rateseuros (EUR) per US dollar -
0.9214 (2016 est.)
0.885 (2015 est.)
0.885 (2014 est.)
0.7634 (2013 est.)
0.78 (2012 est.)