Page 47 - Economic report 2020

TRENDS IN INVESTMENT BY SECTORS another reduction in current transfers from the
Interannual variation rate (%) Chart 5.7 Government and the Comú authorities, which,
in aggregate terms, was greater than the one
in the previous year. On the other hand, public
administration as a whole increased operating
costs (+7.4%) and real investment (+7.1%), more
than in 2021. In parallel, tax revenue grew
strongly. As a result, the central government
went from a budget deficit in 2021 (-2.8% of
GDP) to a budget surplus of 2.3% of GDP in
2022. Equally, the Comú authorities increased
their surplus by four points, to 0.9% of GDP.
All in all, this led to GVA growth in 2022 in the
Industry Construction Commerce Hotel sector subsector of Public administration, education,
health, social and personal services, of 4.1%,
Source: Chamber of Commerce, Industry and Services of Andorra.
six tenths lower than growth in 2021.
Economic dynamism led to a strong Finally, analysis of the indicators for the foreign

increase in imports and the trade deficit. sector show that in 2022, imports shot up by
34% year on year, after the slight increase of
1% in 2021. This trend reflects the recovery in
both domestic demand and the demand generated by foreign visitors, although it should be noted
that part of the increase in trade flows can be explained by rising prices. In parallel, exports saw
an increase of 160.9%, although these were distorted by the performance of the chapter of works
of art and antiques; if this branch is excluded, the growth in foreign sales is 19.2%, a rate that is 45
still significant. All in all, this led to an increase in the trade deficit of 19%, and in the traditionally
negative contribution from the trade balance to Andorran GDP.

Now, the most relevant contribution from the foreign sector to the Andorran economy is from
the revenue from tourism services – the most important source of income for this country –which
recovered remarkably in 2022 and enabled the economy to obtain a positive current account balance.

4. Prospects

For 2023, the prospects point to a slowdown
in Andorran economic growth, which will be QUARTERLY TREND IN GDP AND
mainly held back by the impact on demand NON-FINANCIAL GVA IN REAL TERMS Chart 5.8
from inflation and rising interest rates, and also Interannual variation rate (%)
the loss of dynamism in the Eurozone.

In this respect, GDP data for the first quarter
of 2023 show a positive trend in the economy,
with growth of 3.5% year on year in real terms
(according to the first published estimate, still Andorran economy: general developments | V. Activity and demand
subject to review), representing a slowdown
in growth in relation to the 5.2% noted in the
fourth quarter of 2022.

By sectors, construction is still the most dynamic GDP Non-financial GVA
(+4.1%), although continuing to slow gradually.
Services are still the main driver of the Andorran Source: Department of Statistics.