IMF Confirms Andorra's 3.9% Growth in 2025, Forecasts 2.1% for 2026 Amid Structural Challenges

The International Monetary Fund (IMF) published its final report on Andorra's 2026 Article IV consultation on Monday, confirming robust economic expansion of 3.9% in 2025—above initial projections—and forecasting moderation to 2.1% in 2026.

Growth last year stemmed mainly from resilient tourism and financial services, alongside gains in other areas. The labour market stayed close to full employment, with unemployment around 2.6%. Inflation also cooled, ending 2025 at 2.7% after 2.6% in 2024. For 2026, the IMF expects tourism to stabilise, construction to pick up, and contributions from other sectors to ease.

The report, which follows a preliminary version released on 9 March after IMF experts' visit, stresses ongoing structural hurdles that could curb medium-term momentum. These include low productivity in traditional sectors—signalling a need for diversification—housing access barriers, and population ageing. The latter will intensify pressure on public finances, notably pensions and healthcare, likely requiring reforms.

Healthcare spending stood at 6% of GDP in 2025 and is projected to rise to 6.8% by 2030 and 7.4% by 2035, driven by ageing and demand for specialised care. While praising the system's efficiency and accessibility, the IMF urges steps to contain costs: tighter management of hospital and pharmaceutical outlays, stronger primary care, better chronic disease oversight, and more efficient allocation for sick leave and disability benefits.

The IMF also highlights international cooperation and Andorra's EU integration as pathways to diversification, quality investment, and financial resilience against external shocks. It cautions, however, about short-term transition costs and regulatory adjustments.