Andorra Finance Minister Urges Economic Diversification Amid Strong Growth

Andorra's Finance Minister Ramon Lladós outlined the key economic challenges facing the country during his annual address to the Andorran Family Business Association (EFA) this morning in Andorra la Vella.

Lladós emphasised the need to bolster economic resilience amid heavy reliance on traditional sectors like retail, hospitality, and restaurants. He called for diversification into higher-value industries to boost productivity, noting that national GDP growth has outpaced the European average by three to four times—and even exceeded Spain's—since the pandemic. However, this expansion has been driven largely by population growth in the workforce, limiting gains in GDP per capita.

Despite these constraints, Andorra starts from a strong position, with GDP per capita adjusted for purchasing power placing it among the world's top 15. Revenue streams have diversified progressively, with direct taxes such as personal income tax (IRPF), corporate tax, and non-resident tax seeing sharp rises. This has reduced dependence on consumption-based indirect taxes from visitors, softening the blow from disruptions like the current issues at Pas de la Casa.

On spending, Lladós highlighted increased public investment in housing and infrastructure, alongside greater funding for health and education to strengthen the welfare state. He also stressed innovation as vital for future growth. Public debt is projected to close the year below 30% of GDP—the lowest since 2011 and far from pandemic peaks—allowing flexibility for a small state to weather crises.

Demographic pressures loom large, with official projections showing a sharp rise in over-65s by 2040 across all migration scenarios. This will strain the pension system and public finances, alongside needs for sustainable elderly care and housing solutions.

EFA president Daniel Aristot welcomed the overall positive economic picture but criticised the dominance of traditional sectors and the inefficiency of multiple public administrations in a nation of 88,000 people. He urged stronger public-private partnerships to drive cost savings.