{
  "title": "IMF Executive Board Concludes 2023 Article IV Consultation with the Principality of Andorra",
  "publication": "IMF News, March 6, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/03/06/pr-2470-andorra-imf-executive-board-concludes-2023-article-iv-consultation",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the Principality of Andorra.",
  "publishDate": "2024-03-06",
  "sections": [
    {
      "heading": "Macroeconomic performance and recent developments",
      "content": "- Real GDP growth in 2023: 2.3 percent.\n- Growth drivers in 2023: service sector and a record number of visitors.\n- Labor market tightness: unemployment \"almost no unemployment (1.2 percent at 2023Q3)\".\n- Inflation in 2023: 5.6 percent, driven by second-round effects from wage increases and generalized price pressure in services and imported goods.\n- Housing: shortage in affordable housing noted; substantial increase in foreign residents helped match high labor demand.\n- Macroeconomic buffers: described as solid and rebuilt through sound macroeconomic management."
    },
    {
      "heading": "Outlook and projections",
      "content": "- Long-term potential growth (estimate): 1.5 percent.\n- Real GDP growth forecasts:\n  - 2024: 1.8 percent.\n  - 2025 onwards: 1.5 percent.\n- Inflation forecasts:\n  - 2024: 4.3 percent (period average).\n  - End-2025: 2 percent (projected to subside to 2 percent only by end-2025).\n- Selected projections from \"Andorra: Selected Social and Economic Indicators, 2020–28\" (annual change, percent, unless otherwise indicated):\n  - Real GDP: -11.2 (2020), 8.3 (2021), 9.6 (2022), 2.3 (2023), 1.8 (2024), 1.5 (2025), (continued series provided through 2028).\n  - Nominal GDP: -10.2 (2020), 11.1 (2021), 14.2 (2022), 7.3 (2023), 4.9 (2024), 4.0 (2025), 3.3 (2026), 3.2 (2027), (2028 value listed).\n  - GDP deflator: 1.1 (2020), 2.6 (2021), 4.2 (2022), 3.0 (2023), 2.4 (2024), 1.7 (2025).\n  - Inflation (percent, period average): 6.2 (2021?), 5.6, 4.3, 2.1 (projection series).\n  - Inflation (percent, end of period): -0.5, 4.6, 3.8, 2.0 (series across years).\n  - Unemployment rate (percent): (value header present; specific series not printed in source text beyond 1.2 percent at 2023Q3).\n  - Balance indicators (percent of GDP): Current account 15.5 (2020), 14.1 (2021), 17.3 (2022), 17.5 (2023), 17.6 (2024), 17.7 (2025), 17.8 (2026), 17.5? (series continues).\n  - Exports of goods and services (percent of GDP): 63.7, 72.6, 80.9, 81.6, 81.9, 81.8, 82.0, 82.2 (series across years).\n  - Imports of goods and services (percent of GDP): 59.7, 64.5, 72.2, 72.9, 72.8 (series continues).\n  - Gross international reserves (millions of euros): 41.9, 138.1, 338.4 (series across years).\n  - Revenue (general government, percent of GDP): 41.3, 37.9, 39.7, 38.8, 38.5, 39.4, 39.5, 39.6 (series through projection horizon).\n  - Expenditure (general government, percent of GDP): 42.3, 39.0, 34.9, 36.1, 36.6, 36.8, 36.9, 37.0 (series).\n  - Public debt (percent of GDP): 46.4, 48.6, 39.1, 36.4, 34.7, 33.4, 32.3, 31.3, 30.8 (series).\n  - Credit to nonfinancial private sector (level, percent of GDP): 150.3, 135.2, 116.6, 102.7 (series).\n  - Corporates (percent of GDP): 76.8, 68.8, 61.8, 56.2 (series).\n  - Households (percent of GDP): 73.5, 66.4, 54.8, 46.5 (series).\n  - Exchange rate (€/USD, period average): 0.88, 0.85, 0.95, 0.92 (series).\n  - Nominal GDP (millions of euros): 2,531, 2,811, 3,210, 3,446, 3,613, 3,756, 3,880, 4,007, 4,137 (series 2020–2028)."
    },
    {
      "heading": "Risks, bottlenecks, and balance of risks",
      "content": "- Risks described as balanced but subject to substantial uncertainty and bottlenecks.\n- Downside risks highlighted:\n  - Slower than expected global growth.\n  - More persistent inflation.\n  - Tighter for longer monetary policy in the region.\n  - Emerging fault lines and structural bottlenecks: housing affordability issues, labor shortages, climate change.\n- Upside channels:\n  - Greater than expected regional growth and lower inflation could increase tourist flows and investments.\n  - Adoption of the EU Association Agreement could open up new markets over the medium-term.\n- Buffers: solid macroeconomic buffers can mitigate downside risks should they materialize."
    },
    {
      "heading": "Executive Board assessment and policy advice",
      "content": "- Commendations:\n  - Resilience to external headwinds and sound macroeconomic management that enabled rebuilding of solid buffers.\n  - Commitment to fiscal prudence, effective fiscal framework, and proactive debt management strategy that restored fiscal space and reduced debt.\n  - Strength of the financial system; introduction of the lender of last resort facility.\n- Policy recommendations and priorities emphasized by Directors:\n  - Fiscal policy:\n    - Maintain a tight fiscal stance to support disinflationary efforts and further strengthen buffers.\n    - Channel available fiscal space toward higher infrastructure and affordable housing to tackle structural bottlenecks.\n  - Structural reforms:\n    - Advance structural reforms to promote economic diversification and lift medium‑term growth.\n    - Pursue healthcare reform and build consensus to implement needed pension reforms given population aging.\n    - Remove structural bottlenecks to boost growth and diversify the economy; leverage opportunities from the EU Association Agreement.\n  - Financial sector:\n    - Continue monitoring risks given large size of banks and their international exposure.\n    - Further strengthen the resolution framework.\n    - Ensure that the Andorran Financial Authority is autonomous and fully resourced.\n  - Governance and institutional areas:\n    - Continue efforts in governance, anticorruption and AML/CFT frameworks, and in closing data gaps, with IMF technical assistance.\n    - Enhance digitalization and accelerate climate change adaptation efforts.\n  - Implementation of EU Association Agreement:\n    - Ensure smooth implementation once adopted."
    },
    {
      "heading": "Selected social indicators (as presented)",
      "content": "- Population (2021): 79,535.\n- Population at risk of poverty (percent, 2020): 13.\n- Per capita income (2021, euros): 36,840.\n- Human Development Index Rank (2021): 40 (out of 189).\n- Gini Index (2020): 32.\n- Life expectancy at birth (2021): 82.4.\n\nIMF Executive Board Concludes 2023 Article IV Consultation with the Principality of Andorra — Press Release No. PR 24/70 (March 6, 2024).\n\n---\n\n\n References\n\n- Principality of Andorra and the IMF\n- IMF Policy Advice -- A Factsheet\n- Special Drawing Rights (SDRs) -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/03/06/pr-2470-andorra-imf-executive-board-concludes-2023-article-iv-consultation"
    }
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    "Published: March 6, 2024",
    "Real GDP growth in 2023: 2.3 percent.",
    "Growth drivers in 2023: service sector and a record number of visitors.",
    "Labor market tightness: unemployment \"almost no unemployment (1.2 percent at 2023Q3)\".",
    "Inflation in 2023: 5.6 percent, driven by second-round effects from wage increases and generalized price pressure in services and imported goods.",
    "Housing: shortage in affordable housing noted; substantial increase in foreign residents helped match high labor demand.",
    "Macroeconomic buffers: described as solid and rebuilt through sound macroeconomic management.",
    "Long-term potential growth (estimate): 1.5 percent.",
    "Real GDP growth forecasts:",
    "Inflation forecasts:",
    "Selected projections from \"Andorra: Selected Social and Economic Indicators, 2020–28\" (annual change, percent, unless otherwise indicated):",
    "Risks described as balanced but subject to substantial uncertainty and bottlenecks.",
    "Downside risks highlighted:",
    "Upside channels:",
    "Buffers: solid macroeconomic buffers can mitigate downside risks should they materialize.",
    "Commendations:",
    "Policy recommendations and priorities emphasized by Directors:",
    "Population (2021): 79,535.",
    "Population at risk of poverty (percent, 2020): 13.",
    "Per capita income (2021, euros): 36,840.",
    "Human Development Index Rank (2021): 40 (out of 189).",
    "Gini Index (2020): 32.",
    "Life expectancy at birth (2021): 82.4.",
    "[Principality of Andorra and the IMF](https://www.imf.org/en/countries/and)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)",
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    "[PRESS CENTER](http://presscenter.imf.org/)",
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