Page 11 - Economic report 2020

Introduction

This year, the Chamber of Commerce, Industry and Services of Andorra presents the twenty-
eighth edition of the annual Economic Report of Andorra, providing an in-depth study of the most
notable economic developments in 2022, both inside and outside Andorra, with a special section
on each of the main sectors of the economy and an analysis of the prospects for 2023.

After a historic decline in global economic activity in 2020, as a result of the Covid-19 pandemic,
and just when the economy was on the road to full recovery, the outbreak of war in Ukraine in
February 2022 unleashed a serious energy and supply crisis which pushed up inflation around the
world, impacting on global growth.

This high inflation led central banks around the world to implement interest rate rises with an
eye to moderating economic activity and slowing price rises. So, the world’s Gross Domestic
Product (GDP) grew 3.5% in 2022, representing a major slowdown in comparison with the growth
recorded in 2021.

Among the developed economies, the slowdown in GDP in the USA was notable, with a growth
rate that was clearly below that of the Eurozone, something that had not happened since 2017.
The European economy appeared resilient, due to the favourable trend in the labour market, which
continued to create employment at a good pace, and the fiscal measures taken by governments to
help families and businesses cope with inflation.
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Within this context in 2022, the Andorran economy consolidated the recovery begun in 2021,
with intense growth that exceeded that of the previous year and was also higher than that of the
neighbouring economies of Spain and France. This good economic progress was reflected in the
positive trend in the great majority of indicators of activity and demand. In particular, the two-
figure increases in the number of visitors and imports were remarkable. In parallel, there was a
clear improvement in the labour market situation, with a rise in employment.

Andorran GDP growth in real terms was 8.8% in 2022, higher than the 8.3% of 2021 and
comparable to the dynamism observed in the years before the financial crisis. So, Andorran real
GDP exceeded the pre-pandemic level, although still not in terms of real GDP per capita.

By major sectors of activity, note the high dynamism seen in construction, the second most
important sector of the economy. Services, the main driving force of Andorra’s economy and
representing about 86% of Gross Value Added (GVA), also grew very strongly. The contribution
from industry and the primary sector, which are activities with a lower percentage of total GVA,
was much more modest, with very small increases in GVA.

Within services, the good performance of this sector was led by the activities most affected
by the pandemic, tourism and commerce. These activities were largely propelled by the strong
recovery in numbers of visitors to the country, which increased 55.4% to 8.4 million, exceeding
pre-pandemic figures. Equally, the Chamber’s surveys reflect a clear improvement in business
opinions on the trend in business activity in the hotel sector in 2022. This confirms that tourism
was the main driver of the Andorran economy in 2022.

Commerce also followed a clear pattern of recovery. The positive trend is demonstrated by the
increases in numbers of establishments, numbers of employees and electricity consumption, as
Introduction
well as strong growth in the volume of imports without fuels – while recognising that part of the