Page 46 - Economic report 2020

projects with their own funds, and also the BUSINESSES’ OPINIONS ON ECONOMIC
recent Covid-19 pandemic which hindered the DEVELOPMENTS IN 2022 Table 5.4
appearance of new business projects.
Results of the situation survey in the hotel sector
Banking sector profits were favoured by the
economic dynamism and by the rise in interest 2022 COMPARED WITH 2021 (as % of businesses)
rates. Altogether, this put the return on equity Turnover Higher 59
(ROE) of the banking sector in 2022 at 7.57%, Same 38 3
Lower
higher than the 6.04% of the previous year, Average variation (%) 14.7
while the default ratio dipped to 3.28%, and
levels of solvency (15.76% CET1 phase-in) Volume of investment Higher 39
55
Same
and liquidity (201.29% LCR) were above the Lower 6
European bank average. Average variation (%) 8.9
Number of employees More 44
The improvement in results did not prevent Same 53
continuation of the process of reducing numbers Less 3
of employees in the bank sector (-3.1%), Prospects for 2023 (as % of businesses)
according to data provided by Andorran Banking, Trend in turnover Upward 46
and numbers of branches (-10.8%); this even Stable 49
intensified in comparison with the decreases Downward 6
recorded in 2021. Equally, within the Andorran Trend in volume of Upward 34
financial sector as a whole, the number of investment Stable 54
employees fell 2.8%. This dynamic reflects the Downward 11
complex process of mergers of entities, and also Source: Chamber of Commerce, Industry and Services of Andorra.
the digital transformation of the business which
44
the sector is undergoing, in line with other
European countries. In contrast, the average monthly wage rose 6.3%, much more than in the
previous year (+1.2%), driven up by the high inflation rates that marked the financial year.

To complete the sectoral analysis, the primary sector – which only contributes 0.5% of total
GVA – saw modest growth in 2022, of 1.2%, lower than the revised 2021 rate (+3%). The upward
trend in activity was accompanied by an increase in the number of employees (3%), although the
tobacco harvest declined (-2.1%), as did the utilised agricultural area (-0.4%), numbers of livestock
(-5.4%) and numbers of establishments (-3.6%).

Andorran economy: general developments | V. Activity and demand
3. Developments in demand by components

The good performance of the Andorran economy in 2022 is also reflected in the data about demand,
with an upward trend in the great majority of available indicators. Consumption was spurred by rising
employment and nominal wages, although high inflation diminished consumers’ purchasing power.

As for investment, all indicators show a positive trend, such as lorry and van registrations (+19.6%)
or capital goods imports (+45.4%). Moreover, the Chamber’s surveys relating to 2022 reflect
increased investment in all the main sectors of the economy, especially strong in the hotel
sector, although financial conditions became less
favourable as interest rates rose progressively The trend in business investment was
over the year. In fact, this factor could put a positive, especially in the hotel sector.
check on investment in the future.

As for the public sector, the end of the pandemic enabled the authorities to continue the route
of cutting public spending that was started in 2021. So, public sector actions took the form of