Page 46 - economic report 2021

3. Developments in demand by components

The improvement in the Andorran economy in TRENDS IN INVESTMENT BY SECTORS
2021 is also reflected in the data about demand, Interannual variation rate (%) Chart 5.7
with upward trends in the great majority of
30
available indicators. Consumption was driven
by the rising numbers of employees and wages, 20
and also by the progressive lifting of restrictions 10
on movement and social activity. This dynamic 0
consumption was evident, for example, in a -10
strong increase in car registrations (23.5%).
-20
-30
As for investment, all indicators show a positive
trend, such as lorry and van registrations (12.1%) -40
or capital goods imports (10%). Moreover, the 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Chamber’s surveys relating to 2021 reflect Industry Construct on Commerce Hotel sector
increased investment in all the main sectors
of the economy, especially intense in the Source: Chamber of Commerce, Industry and Services of Andorra.
construction sector, in a context of favourable
financial conditions and continued support Consumpt on and investment
measures from the Government and from banks showed clear signs of recovery while
in the form of lending.
growth in public spending slowed.

As for the public sector, the improvement in
the health sector in 2021 in relation to 2020 enabled growth in public spending by the authorities
44
to be contained. The actions by the public sector took the form of a gentle reduction in current
transfers from the Government and the Comú authorities, after the strong increase in 2020
to counter the economic effects of the pandemic on businesses and individuals. On the other
hand, public administration increased operating costs (3.2%) and real investment (6.2%), in
contrast with the reductions in 2020. In parallel, tax revenue recovered. As a result, the central
government reduced the budget deficit to 2.8% of GDP, after the serious deterioration seen
in 2020 (-4.1%). On the other hand, the Comú authorities reduced their surplus more than
one point, to 0.5% of GDP. All in all, this led to GVA growth in 2021 in the subsector of Public
administration, education, health, social and personal services, of 3.5%, contrasting with the
The Andorran economy: general developments | V. Activity and demand
decline recorded in 2020.

The economic recovery could Finally, analysis of the indicators for the foreign
also be seen in an increase in sector show that in 2021, imports increased
imports and the trade def cit. 1% year on year, after the 5% fall in 2020. If
we exclude works of art and antiques, growth
rises to a notable 21.3%. This trend reflects the
recovery in both domestic demand and the demand generated by foreign visitors. Contrasting with
these data, exports in 2021 saw a decline of 1.8%, after reaching a historic high in 2020, although
if works of art and antiques are excluded, this variation becomes very positive (24.6%). All in all,
this meant an increase in the trade deficit of 1.4%, and the traditionally negative contribution
from the trade balance to Andorran GDP.

The most relevant contribution from the foreign sector to the Andorran economy is revenue from
tourism services – the most important source of income to the country – which started to recover
in 2021 after plummeting in 2020, but with still much lower values than before the pandemic.