Economy of Andorra

Economy of Andorra

Currency	Euro (EUR)
Fiscal year	Calendar year
Trade organisations	EU customs union
Statistics
GDP	$1,84 billion (2004)
GDP growth	4% (2004)
GDP per capita	$24,000 (2004)
GDP by sector	no data
Inflation (CPI)	1.9% (May 2005)
Population below poverty line	no data
Labour force	48,740 (2004)
Labour force by occupation	agriculture 0.34%, industry 19.63%, services 80.03% (2004)
Unemployment	0% (1996)
Main industries	tourism (particularly skiing), cattle raising, timber, tobacco, banking
External
Exports	$145 million (f.o.b., 2004)
Export goods	tobacco products, furniture
Main export partners	France 34%, Spain 58% (1998)
Imports	$1,077 million (c.i.f., 1998)
Import goods	consumer goods, food, electricity
Main import partners	Spain 51.5%, France 22.3%, US 0.3% (2003)
Public finances
Government debt	no data
Revenues	$385 million (1997)
Expenses	$342 million (1997)
Economic aid	no data
All values, unless otherwise stated, are in US dollars.

Andorra's GDP for 1998 was $1,2 billion, 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 11 600 thousand 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. As a result, smuggling is commonplace. 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.

Overview

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

Statistics

GDP: purchasing power parity - $1,84 billion (2004 est.)

GDP - real growth rate: 4% (2004 est.)

GDP - per capita: purchasing power parity - $24 000 (2004 est.)

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

Population below poverty line: NA%

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

Inflation rate (consumer prices): 3,4% (2000)

Labor force: 48 740 (2004)

Labor force - by occupation: agriculture 0,34%, industry 19,63%, services 80.03% (2004)

Unemployment rate: 0% (1996 est.)

Budget:
revenues: $385 million
expenditures: $342 million, including capital expenditures of $NA (1997)

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

Industrial production growth rate: NA%

Electricity - production: 116 GWh (1998)

Electricity - production by source:
fossil fuel: 0%
hydro: 40%
nuclear: 0%
other: 60% imported from Spain

Electricity - consumption: NA kWh (1998 est.)

Electricity - exports: 0 kWh

Electricity - imports: NA kWh; note - imports electricity from Spain and France

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

Exports: $145 million (f.o.b., 2004)

Exports - commodities: tobacco products, furniture

Exports - partners: France 34%, Spain 58% (1998)

Imports: $1 077 million (c.i.f., 1998)

Imports - commodities: consumer goods, food, electricity

Imports - partners: Spain 51,5%, France 22,3%, US 0.3% (2003)

Debt - external: $NA

Economic aid - recipient: none

Currency: Euros have replaced the French franc and the Spanish peseta.

Exchange rates: euros per US$1 - 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

References

•  This article incorporates public domain material from The World Factbook. CIA.
•  This article incorporates public domain material from U.S. Bilateral Relations Fact Sheets. United States Department of State.

See also

• Economy of Europe
• Andorra
• Article on Duty Free Shopping Andorra