The International Monetary Fund (IMF) forecasts that growth in Andorra will prove to be the second-fastest in Europe in 2022, after Ireland. It also points out that its progression will be higher than that of our neighbouring countries France and Spain, and will be above the average for the Eurozone.
Table of contents:
- Forecast growth
Annual Meeting of the IMF
Measures that have strengthened Andorra’s position
Investing in Andorra
Every year, the IMF report assesses the prospects for global economic growth by reviewing global and country-specific indicators. The good news is that the figures for Andorra are better than those of the previous assessment.
Gross domestic product
The IMF forecasts that the Principality will close 2022 with growth in nominal GDP rising from 8.2% to 10.9%, and in real GDP from 4.5% to 6.6%. Notably, this growth will be higher than in Spain, where growth is forecast to reach 4.3 %, and higher than in France, with a forecast of 2.5%. The average growth rate for the euro area will be 3.1%.
Nominal GDP growth for the coming year is expected to reach 4.8% instead of 4.7% and real GDP to fall from 2.7% to 2%. Although the figures are lower for 2023, they exceed those in the previous estimate and are more positive than those of neighbouring countries.
The IMF has also revised its forecast of inflation for 2022 to 5.3%, a better figure than Spain’s 8.8% and France’s 5.8%. In the euro area, it forecasts 8.3% for 2022. Andorra remains 3 points below the European average.
This report has been prepared in the context of the Annual Meeting of the International Monetary Fund, which brings together representatives of the member states. At this meeting, which usually takes place at the end of the year, the organisation reviews general economic indicators on a global scale and in detail for each country.
In addition, the Andorran delegation also held meetings with the heads of the central banks of the Netherlands and Iceland, in order to establish financial synergies. The members of the Andorran delegation also attended an assembly of 78 ministers of finance, with a view to establishing policies on climate action and sustainability.
It should be recalled that in April, 2022, representatives of the IMF travelled to Andorra to prepare monitoring reports. In this article we summarise their assessments.
Andorra at the International Monetary Fund
Andorra became the 190th member of the IMF on 16th October 2020. If you would like to learn about the advantages of Andorra’s membership, we recommend that you read this article in our blog.
In recent years, Andorra has taken a series of actions and legal measures to reach a competitive economic position in international markets and to lay the foundations for the economic future.
Digital economic diversification
It is no secret that the Principality has long sought to diversify its economic model so as not to rely on tourism and trade as its only sources of income, and the Government is now taking action in this regard. The approval of the law on the digital economy, entrepreneurship and innovation gave rise to a framework which favours digitalisation, and which incorporates special economic areas to attract experienced business people by means of incentives. It also provided aid for investment and development so that these types of projects could materialise. In addition, this law inaugurated the National Innovation Strategy, in which the public and private sectors will collaborate to create an ecosystem of innovation.
The strategic business plan
Trade in Andorra has always been of paramount importance. The aim of the strategic plan is to improve the competitiveness of the sector through innovation, digitalisation and the opening-up of new customer segments. The plan should make it possible to improve the country’s commercial positioning by means of proposals in the areas of innovation, digitalisation and sustainability.
The aim of this strategy is to increase the competitiveness of the sector in order to create a more attractive location. The modernisation of the sector will bring improvements that will enhance visitors’ experiences.
On 17th December, 2021, the airline linking Andorra-La Seu airport with Madrid began operating, and has been well received by users in both countries. For this reason, the service operated by Air Nostrum is being prolonged for an additional year. One of the objectives pursued by the Andorran Government is to be able to reach Lisbon and Paris to make connections to America and Asia even easier.
The route recorded an average occupancy rate of 69% during its first year of operation, with two flights per week. The airline currently operates on Fridays and Sundays, but hopes to add one more day per week to facilitate business trips. Another strong attraction of the route between Madrid and Andorra is that it is the most successful route ever launched by this subsidiary of Iberia.
The economic actions implemented in the country in recent years are now bearing fruit, as shown by the good forecasts of the International Monetary Fund. Together with these good forecasts and the advantages that the country offers for living and investing, Andorra is reinforcing its position as a very attractive location for those who are considering coming from abroad to start up a business in 2023. Low taxation, a high quality of life and proximity to France and Spain are some of the points that foreign investors value the most when setting up a company in Andorra.
Advantia Assessors can help you and guide you through all the procedures and formalities with the authorities so that you have everything under control.