Economy of Andorra

Economy of Andorra

Currency	Euro (EUR)
Fiscal year	Calendar year
Trade organisations	EU customs union
Statistics
GDP	$3.163 billion (PPP, 2012 est.)
GDP rank	180th (PPP, 2012 est.)
GDP growth	-1.6% (Real, 2012 est.)
GDP per capita	$37,200 (PPP, 2012 est.)
GDP by sector	agriculture 14%, industry 79%, services 6% (2011 est.)
Inflation (CPI)	1.1% (CPI, 2012 est.)
Population below poverty line	no data
Labour force	36,060 (2012)
Labour force by occupation	agriculture 0.4%, industry 4.7%, services 94.9% (2010)
Unemployment	2.9% (2012 est.)
Main industries	tourism (particularly skiing), cattle raising, timber, banking, tobacco, furniture
External
Exports	$70 million (2012)
Export goods	tobacco products, furniture
Main export partners	France 34%, Spain 58% (1998)
Imports	$1.43 billion (2012)
Import goods	consumer goods, food, electricity
Main import partners	Spain 51.5%, France 22.3%, US 0.3% (2003)
Public finances
Public debt	no data
Revenues	$403 million (2011)
Expenses	$470 million (2011)
Economic aid	no data
Credit rating	A (Domestic) A (Foreign) AAA (T&C Assessment) (Standard & Poor's)
Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars.

Andorra's GDP in 2007 was $3.66 billion (CIA), with tourism as its principal component. Attractive for shoppers from France and Spain as a free port, the country 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. Its negotiations on duty-free status and relationship with the Union 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, 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 Andorra must, to some degree, integrate into the European Union in order to continue to enjoy its prosperity. Although less than 2% of the land is arable, 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.

Tourism, the mainstay of Andorra's tiny, well-to-do economy, accounts for roughly 80% of GDP growth. 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) and as a non-EU member for agricultural products.