Principality of Andorra: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Principality of Andorra
IMF Staff Country Reports, March 6, 2024
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- Principality of Andorra: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Principality of Andorra
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Bibliographic details
- Published: March 6, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400267680.002
Growth outlook and macroeconomic stance
- The Andorra economy is showing resilience and is growing slightly above its long-term potential despite external headwinds.
- Over the medium-term, the economy is projected to slow to its lower long-term potential level estimated at 1.5 percent, comparable to average growth in the euro area.
- After a strong growth rebound, structural reforms can raise potential growth and address emerging fault lines.
- The authorities should maintain tight fiscal policy as long as growth remains close to potential and price pressures are persistent.
Risks, vulnerabilities, and macro buffers
- Risks to the outlook are balanced.
- The economy has solid macroeconomic buffers.
- Emerging structural bottlenecks of concern:
- Lack of affordable housing.
- Labor shortages.
- Vulnerability to climate change.
Fiscal policy, public investment, and pensions
- There is fiscal space for higher public investment to support potential growth and mitigate structural bottlenecks.
- Pension system reform is overdue to secure its long-term sustainability.
- Policy guidance emphasizes maintaining fiscal discipline while selectively increasing investment to address structural constraints.
Structural reform priorities
- Ambitious structural reforms are key to diversifying the economy and addressing emerging bottlenecks, including:
- Removing remaining constraints on investment.
- Improving housing affordability.
- Retaining talent.
- Fostering digitalization and economic efficiency.
Source: Principality of Andorra: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Principality of Andorra
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