Economic Outline

flag Andorra Andorra: Economic Outline

Economic Indicators

Andorra's economy is dependent on foreign trade and relies primarily on tourism, commerce, and financial services. Growth has picked up slowly in recent years but remains sensitive to external impacts: as such, it was severely hit by the COVID-19 pandemic but rebounded ever since. In 2023, the Andorran economy displayed resilience, surpassing its long-term potential growth rate despite facing external challenges. According to the IMF, the economy expanded by an estimated 2.3% last year, primarily propelled by the service sector and a notable influx of tourists. Looking ahead, GDP growth is anticipated to decelerate to around 1.5%, aligning more closely with its lower long-term potential. Projections indicate real GDP growth at 1.8% for 2024 and sustaining at 1.5% from 2025 onward, mirroring the average growth rate in the euro area.

Andorra's public finances are generally sound, and low levels of general government debt provided the authorities with ample space to respond to recent external shocks. Despite persistent inflation and a positive output gap, the government maintained primary fiscal surpluses while moderately increasing public investment, particularly in social housing, throughout 2023. The primary balance surplus was estimated at 0.9% of GDP, with an overall surplus of 0.4% of GDP. In 2022, Andorra finalized its debt management strategy by issuing EUR 1.2 billion in Eurobonds. This move enabled the government to extend the maturity of its debt under favorable rates and broaden its financing sources. The government is projected to sustain primary balance surpluses of approximately 1% of GDP in the medium term. This trajectory is anticipated to lead to a reduction in debt to around 30% of GDP by 2027. On average, Andorra's significant current account surplus is nearly equally supported by net exports and net primary income. Tourism exports serve as the primary driver, leading to a larger trade surplus in services compared to the trade deficit in goods. This dynamic culminates in a positive overall trade balance for Andorra. Although private banking typically yields lower returns, In 2022, inflation surged to 6.2%, driven by significant increases in energy and food prices within the region, along with minor contributions from supply limitations and a slightly positive output gap. In 2023, headline inflation moderated to 5.6%, influenced notably by global fuel prices. The IMF expects inflation to decline further, to 4.3% this year and 2.4% in 2025. Andorra's economy is based on its services sector (78.1% of GDP), notably tourism, real estate, and finance (World Bank, latest data available). The banking sector is relatively large when compared to the country’s size, with the total banking assets representing around 6 times the nominal GDP, which may pose risks to the economy and the government's balance sheet, although these risks are mitigated by the high liquidity of the system and newly-created FX reserves. Andorran banks saw profitability climb to an annualized ROA of 0.8% in 2023Q3, compared to 0.6% in 2022 and 0.5% in 2021. This increase in profitability was propelled by higher interest margins, surpassing those of European counterparts (IMF).

A steady rise in workforce demand drove domestic labor participation and employment levels above those seen before the pandemic. A substantial increase in residents, nearly 8% over two years, largely due to immigration, helped meet this heightened labor demand. However, this only partially addressed the growing demand, as job vacancies increased across sectors, particularly in hospitality. Although Andorra historically maintained low unemployment rates, around 2%, recent labor market tightness has been exacerbated by shortages, notably in neighboring countries' service sectors. By 2023Q3, unemployment dropped to 1.2%, with only 266 individuals unemployed—among the lowest rates in Europe and consistent with Andorra's historical levels. Government-mandated increases, totaling close to 15% in the minimum wage during 2022–23, aimed to offset workers' loss of purchasing power while also ensuring competitiveness in the Andorran labor market. Andorra's income per capita is higher than the European average, and the country has one of the highest life expectancy rates in the world. As a result, the urban environment in the Principality is safe, the healthcare system is well-developed, and the education system is trilingual (Catalan, French, and Spanish).


Monetary Indicators 20152016201720182019
Euro (EUR) - Average Annual Exchange Rate For 1 MUR

Source: World Bank - Latest available data.


Main Sectors of Industry

Breakdown of Economic Activity By Sector Agriculture Industry Services
Value Added (in % of GDP) 0.5 11.9 78.1
Value Added (Annual % Change) 1.5 4.9 7.1

Source: World Bank - Latest available data.


Country Risk

See the country risk analysis provided by Coface.


Indicator of Political Freedom


The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Political Freedom:

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House


Indicator of Freedom of the Press


The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:

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Sources of General Economic Information

Useful Resources
Ministry of Finance
Andorra Chamber of Commerce, Industry and Services
Andorran Financial Authority (AFA)

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Latest Update: May 2024