Andorra Economy

General

Tourism, the mainstay of Andorra’s tiny, well-to-do economy, accounts for roughly 80% of GDP. An estimated 10.2 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 adjoining 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 – only 2% of the land is arable – and most food has to be imported. Some tobacco is grown locally. The principal livestock activity is domestic sheep raising. Manufacturing output consists mainly of cigarettes, cigars and furniture. Andorra’s natural resources include hydroelectric power, mineral water, timber, iron ore and lead.

Andorra is not a member of the European Union, but enjoys a special relationship with it, such as being treated as an EU member for trade in manufactured goods (no tariffs) and as a non-EU member for agricultural products. Andorra lacks a currency of its own and uses that of its two surrounding nations. Andorra used the French franc and the Spanish peseta until 1999 when both currencies were replaced by the EU’s single currency, the euro. Coins and notes of both the franc and the peseta, however, remained legal tender in Andorra until 2002. Andorra is negotiating to issue its own euro coins.

Overview

Economy – overview :
Tourism, the mainstay of Andorra’s tiny, well-to-do economy, accounts for more than 80% of GDP. An estimated 11 million tourists visit annually, attracted by Andorra’s duty-free status for some products and by its summer and winter resorts. Andorra’s comparative advantage eroded when the borders of neighbouring France and Spain opened, providing broader availability of goods and lower tariffs. The banking sector, with its partial “tax haven” status, also contributes substantially to the economy. Agricultural production is limited – only 2% of the land is arable – and most food has to be imported. The principal livestock activity is sheep raising. Manufacturing output 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) and as a non-EU member for agricultural products.

GDP (purchasing power parity) :
$4.22 billion (2008)

GDP (official exchange rate) :
$NA

GDP – real growth rate :
2.6% (2008 est.)

GDP – per capita (PPP) :
$44,900 (2008)

GDP – composition by sector :
agriculture: NA%
industry: NA%
services: NA%

Labour force :
42,220 (2008)

Labour force – by occupation :
agriculture: 0.5%
industry: 18.5%
services: 81% (2008)

Unemployment rate :
7% (2008)

Population below poverty line :
8% (2008)

Household income or consumption by percentage share :
lowest 10%: NA%
highest 10%: NA%

Budget :
revenues: $531.6 million
expenditures: $531.6 million (2008)

Inflation rate (consumer prices) :
2.3% (2008)

Agriculture – products :
small quantities of rye, wheat, barley, oats, vegetables; sheep

Industries :
tourism (particularly skiing), cattle raising, timber, banking, tobacco, furniture

Industrial production growth rate :
NA%

Electricity – production :
NA kWh

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