Economy of Andorra

Tourism is the mainstay of Andorra's economy, accounting 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.

Fields on a southward-facing slope near Andorra la Vella

Because of Andorra's mountainous character, only about 2% of the land is suitable for crops. However, until the tourism sector in Andorra experienced an upsurge, agriculture had been the mainstay of the economy. Hay, tobacco and vegetables must be irrigated; cereals, mainly rye and barley, are dry-cropped. Most of the cropped land is devoted to hay production for animal feed. Since there is insufficient sunlight on northward-facing slopes and the lands in shadow are too cold for most crops, some southward-facing fields high in the mountains must be used even though they are a considerable distance from the farmers’ homes.

Tobacco, the most distinctive Andorran crop, is grown on about 8% of Andorra's farmland.[5] Andorran tobacco is usually mixed with eastern tobaccos, because of its strong quality. Other farm products include cereals, potatoes, and garden vegetables. Grapes are used mainly for raisins and for the making of anisette. The lack of modern methods on Andorra's family farms is causing the agricultural sector to decrease in importance. Most food is now imported.

For many centuries, until eclipsed by tourism and other service industries, sheep raising was the basis of Andorra's economy. Andorran mules are still greatly prized. Cattle, sheep and goats are raised both in the valleys and in some of the higher areas. Cattle are raised mainly for their meat, and there are few dairy cows. When the cattle move upward in the spring, entire families move to temporary villages in the mountains to herd, mow, and plant. Large droves of sheep and goats from France and Spain feed in Andorra in the summer, and the Spanish-owned animals in particular are looked after by Andorran shepherds. On their way back to their native land, many of the animals are sold at annual fairs; the Spanish fairs are usually held in Andorra in September and the French in November. Andorra's own animal fairs are also held in the fall.

Livestock includes an estimated 9,000 sheep; 1,100 cattle; and 200 horses. Meat production has increased in recent years, but imports account for about 90% of total meat consumption. The milk produced is sufficient for domestic consumption, and so milk is exported to the EU, too.

The streams are full of trout and other freshwater fish, but Andorra imports most fish for domestic consumption from Catalonia.

About 10,000 hectares (25,000 acres), or 22% of the total land area, is forested. Fuel wood may be freely gathered by anyone, but it may not be bought or sold. Wood needed for building purposes is cut in rotation from a different district each year. For centuries logs have been shipped to Spain. Most reforestation consists of pine trees.

For hundreds of years, Andorran forges were famous in northern Spain. There are still iron ore deposits in the valley of Ordino and in many of the mountain areas, but access to them is difficult. In addition to iron, small amounts of lead are still mined, and alum and building stones are extracted. The sulfurous waters of Les Escaldes are used in washing wool.

Sotheby's Andorra office

GDP: purchasing power parity - US$3.66 billion (2007)
country comparison to the world: 168

GDP - real growth rate: 2% (2007 est.)
country comparison to the world: 163

GDP - per capita: purchasing power parity - US$42,500 (2007)
country comparison to the world: 15

GDP - composition by sector:
agriculture: N/A
industry: N/A
services: N/A

Population below poverty line: N/A

Household income or consumption by percentage share:
lowest 10%: N/A
highest 10%: N/A

Inflation rate (consumer prices): 3.9% (2007)
country comparison to the world: 59

Labor force: 42,230 (2007)
country comparison to the world: 185

Labor force - by occupation: agriculture 0.3%, industry 20.8%, services 79% (2007)

Unemployment rate: 2.9%
country comparison to the world: 1

Budget:
revenues: US$496.9 million
expenditures: US$496.8 million (2007)

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

Industrial production growth rate: N/A

Electricity - production: N/A

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

Electricity - consumption: N/A

Electricity - exports: N/A

Electricity - imports: N/A ; note - imports electricity from Spain and France; Andorra generates a small amount of hydropower

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

Exports: US$117.1 million f.o.b. (2007)
country comparison to the world: 193

Exports - commodities: tobacco products, furniture

Exports - partners: France 17%, Spain 59.5% (2006)

Imports: US$1.789 billion (2007)
country comparison to the world: 154

Imports - commodities: consumer goods, food, electricity

Imports - partners: Spain 53.2%, France 21.1% (2006)

Debt - external: N/A

Economic aid - recipient: none

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

Exchange rates: euros per US dollar - 0.6827 (2008), 0.7306 (2007), 0.7964 (2006), 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

• Tourism in Andorra

•  This article incorporates public domain material from the CIA World Factbook website https://www.cia.gov/the-world-factbook/.
•  This article incorporates public domain material from the United States Department of State website https://www.state.gov/countries-areas/. (U.S. Bilateral Relations Fact Sheets)