Andorra's Economy Grows 3.9%, Posts €88M Surplus, Beats Neighbors

Andorra's economy expanded by 3.9% in real terms last year, outpacing initial forecasts of around 2% and surpassing growth in neighbouring countries and the European Union average. Ministers Conxita Marsol, responsible for Presidency, Economy, Work and Housing, and Ramon Lladós, the Finance minister, presented the figures on Wednesday, highlighting a budget surplus of €88.3 million for 2025—contrasting sharply with an initial projection of a €35 million deficit.

The GDP growth reflects diversification across sectors. Traditional pillars like tourism and retail remained solid, while professional and technical services added significant value. Construction led with a 7.3% rise, though at a slower pace than in 2024, followed by financial and professional activities at 6.5% and public services at 4.8%. Services overall grew 4.1%, with subsectors like commerce and hospitality up 0.5%. The industrial sector dipped 2.7%, mainly due to declines in tobacco production. Nominal GDP reached €3,983.2 million, a 6.6% increase, while real GDP stood near €3,118 million. GDP per capita rose 1.6% to €35,016 in real terms.

This performance exceeded Spain's 2.8%, France's 0.8% and the EU's 1.5%. Higher tax revenues, without rate increases, drove the surplus: the general indirect tax climbed 13% to €186 million, corporate tax surged 56% to €167 million, and personal income tax rose 28% to €87 million. Consumption taxes fell 18% to €92 million amid a weak prior year for tobacco. Lladós credited prudent budgeting, rigorous execution and near-complete planned investments, alongside policies boosting purchasing power, such as minimum wage hikes exceeding inflation.

Public debt dropped to 29.4% of GDP, the lowest since 2010 and well below Spain's 100.8% and France's 115.6%. The government plans to amend the public finance sustainability law to allow surplus funds for social investments or national projects, beyond debt repayment. Priorities include expanding affordable public rental housing to over 600 units by 2027, potentially adding around 150 properties. Marsol outlined acquiring near-ready buildings for quick market entry in three to four months, and exploring cohousing options like a hotel conversion for over-65s, addressing rising demand in that age group.

Officials noted global risks, including Middle East tensions affecting energy markets, but affirmed no immediate budget revisions. Population growth moderated to 2.3%, aligning with aims to cap expansion while attracting higher-wage professionals for sustained resilience.