Flag of Andorra on Our Flagpole

Andorra

Andorra consists of seven parishes:

 

Due to its location in the eastern Pyrenees mountain range, Andorra consists predominantly of rugged mountains, the highest being the Coma Pedrosa at 9,652 feet, and the average elevation of Andorra is 6,549 feet. These are dissected by three narrow valleys in a Y shape that combine into one as the main stream, the Gran Valira river, leaves the country for Spain (at Andorra’s lowest point of 2,756 feet). Andorra’s land area is 181 square miles.

Andorra 1

Economy:

Tourism, the mainstay of Andorra’s tiny, well-to-do economy, accounts for roughly 80% of GDP. An estimated 10.2 million tourists visit annually, attracted by Andorra’s duty-free status and by its summer and winter resorts.

Caldea Thermal Spa
Caldea Thermal Spa

One of the main sources of income in Andorra is tourism from ski resorts which total over 109 miles of ski ground. The sport brings in over 7 million visitors annually and an estimated 340 million euros per year, sustaining 2,000 direct and 10,000 indirect jobs at present since 2007.

Grand Valira Ski Resort
Grand Valira Ski Resort

The banking sector, with its tax haven status, also contributes substantially to the economy. The financial system comprises five banking groups, one specialized credit entity, 8 investment undertaking management entities, 3 asset management companies and 29 insurance companies, 14 of which are branches of foreign insurance companies authorized to operate in the principality.

Agricultural production is limited, only 2% of the land is arable, and most food has to be imported. Some tobacco is grown locally. The principal livestock activity is domestic sheep raising. Manufacturing output consists mainly of cigarettes, cigars, and furniture. Andorra’s natural resources include hydroelectric power, mineral water, timber, iron ore, and lead.

2009 Exports
2009 Exports

Andorra is not a member of the European Union, but enjoys a special relationship with it, such as being treated as an EU member for trade in manufactured goods (no tariffs) and as a non-EU member for agricultural products. Andorra lacked a currency of its own and used both the French franc and the Spanish peseta in banking transactions until 31 December 1999, when both currencies were replaced by the EU’s single currency, the euro. Coins and notes of both the franc and the peseta remained legal tender in Andorra until 31 December 2002. Andorra negotiated to issue its own euro coins, beginning in 2014.

Andorra has traditionally had one of the world’s lowest unemployment rates. In 2009 it stood at 2.9%.

Andorra has long benefited from its status as a tax haven, with revenues raised exclusively through import tariffs. However, during the European sovereign-debt crisis of the 21st century, its tourist economy suffered a decline, partly caused by a drop in the prices of goods in Spain, which undercut Andorran duty-free shopping. This led to a growth in unemployment. On 1 January 2012, a business tax of 10% was introduced, followed by a sales tax of 2% a year later, which raised just over 14 million euros in its first quarter.

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