The Andorran economy will grow by 2.1% in 2023, according to the IMF


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The International Monetary Fund’s (IMF) latest Annual Report provides global economic forecasts, highlighting broad trends and offering in-depth analysis of individual economies. It serves as a guide to understanding and anticipating economic movements on a global and regional scale.
Andorra, as the 190th member of the organisation, is also included in this analysis. The report provides a detailed overview that lets us paint a clearer picture of what the economic future may hold for our country.

Table of contents:

  1. Improvement of the May report’s forecasts
    Economic estimates for 2024
    IMF global forecasts
    Credit rating agency reports
    Revision of the Foreign Investment Law

Improvement of the May report’s forecasts

At its annual meeting, the International Monetary Fund has forecast economic growth for Andorra this year, placing the country in the group of other advanced economies. It also considers the outlook for the country’s gross domestic product to be better than that of the Eurozone countries as a whole.

Gross domestic product

The country’s GDP is forecast to grow by 2.1% by the end of the year, an improvement over the 1.3% predicted in the previous report in May. This will make it comparable with countries such as Spain, where GDP is forecast to grow by 2.5%, or Portugal, where the prediction is 2.3%. This figure will surpass that of countries such as France (1%) and Germany (-0.5%), while the European average will be 1.2%.


Regarding inflation, this is expected to end the year at 5.2%, confirming the increase of recent months due to higher fuel prices. Although this figure is high, it represents an improvement on the September index, which stood at 6.1%. Spain will end the year with an inflation rate of 3.5%, while in France this figure will be 5.6%. According to IMF forecasts, the principality will reach similar levels to the Eurozone CPI, which is expected to rise to 5.6%.

Economic estimates for 2024

It is expected that Andorra’s GDP will continue to grow next year, but at a slower rate of 1.5%. This estimate puts it at a few tenths above the rate forecast for the euro area, which is around 1.2%. Spain’s growth trend is similar and the rate in 2024 will be lower than this year, down from 2.5% to 1.7%. In France, it will improve from 1% to 1.3%.
As for the consumer price index (CPI), it is expected to be more moderate in Andorra, at 3.5%. A figure similar to that of the Eurozone countries, which will also fall to 3.3%.

The unemployment rate will continue to fall

Another estimate relates to unemployment, which is expected to improve. According to the IMF, it will be at 1.9% by the end of 2023 and will fall even further next year to 1.7%. According to the international organisation, this is a very positive development.

IMF global forecasts

The outlook for global growth shows a decline from 3.5% in 2022 to 3% in 2023 and 2.9% in 2024. According to the IMF, the global economy is still recovering, but slowly in the wake of the effects of the pandemic and the conflict in Ukraine. The agency reports that global activity bottomed out at the end of last year, partly due to rising inflation, which is gradually being brought under control. It expects headline inflation to fall to 4.8% (in 2022 it closed the year at 9.2%) and estimates that core inflation (which excludes food and energy prices) will fall to 4.5% in 2024.

Credit rating agency reports

In 2023, international agencies published several reports assessing Andorra’s financial soundness.

Standard & Poor’s (S&P)

In its most recent assessment in November, Andorra maintained the same rating as in May: BBB+/A-2 with a positive outlook. The report highlights the reduction of public debt and structural reforms aimed at financial stability. It also points to the country’s strong external position, with high current account surpluses reflecting the profitability of the tourism and financial sectors. The agency also stresses the importance of maintaining macroeconomic stability policies and of legislative work to ensure the sustainability of the pension system.

Fitch Ratings

In its assessment at the end of October, this agency also kept its rating at A- with a stable outlook. Its report praised the policies put in place to address the rising cost of living and the loss of purchasing power. Another aspect highlighted by the agency is the strong resilience of the Andorran banking sector.

Revision of the Foreign Investment Law

The Andorran government is working on updating the Foreign Investment Law and intends to present it in the first few months of 2024. One of the proposed changes is the introduction of a property acquisition tax. This amendment was put forward as a bill and was approved by the Council of Ministers at the end of October, pending its passage through Parliament. It will regulate the percentages that both individuals and companies have to pay, depending on the investment they make

Progressive taxation

Tax will be levied on the real, progressive, and tiered value of property purchases by foreigners:
• For one unit, the tax rate is 3%.
• For between 2 and 5 properties, 5% shall apply.
• For between 6 and 9 dwellings, the tax will be 8%.
• For 10 or more building units or for urban or real estate developments, the percentage shall be 10%.
In addition, if the intention is to acquire or build dwellings for rental as habitual and permanent residences for at least 10 years, a 90% rebate of the tax liability will be granted.
The aim of the scheme is to prevent speculation, promote rental housing and, at the same time, increase state revenue to cover public expenditure.

If you would like to invest or establish a company in Andorra, Advantia Assessors will guide you through every step of the process.