Page 7 - economic report 2019

Introduction

Our annual Andorran economic report celebrates its twenty-fifth anniversary this year at a
particularly poignant moment in recent economic history. This is due to the global pandemic that
has marked 2020 and produced a radical change in relations between individuals and businesses,
with serious economic consequences in the short term and great uncertainty for years to come.

The aim of this report, which fulfils one of our legal duties, is to spread knowledge about the
Andorran economy and provide a useful reference for all stakeholders in this country. Its value
depends, in turn, on the loyal collaboration of Andorran businesses, which periodically provide
important information to us about the business climate and developments. This information allows
us to read the pulse of the economy and anticipate any obstacles and requirements that need to
be addressed so that our country can continue to progress.

It would not be possible to prepare this report without the information, especially statistics,
provided by the Government, the Comú authorities, the CASS and other national institutions
and associations, or the work of the internal and external experts who collect all the information
and analyse it according to certain criteria. We must also highlight the role of the communication
media, an essential vehicle for disseminating the content of this document. The Chamber of
Commerce would like to express its gratitude to all of them.

This report analyses developments in 2019 and offers our opinion on economic prospects for
2020. The report is structured as three large blocks: the first block on the external environment, 5
the second analysing general developments in the Andorran economy and the third detailing
developments in the main sectors.

As for the external environment, in 2019 the world economy saw a synchronised slowdown in
developed and developing economies, resulting in 2.9% growth, lower than the 3.6% in 2018.
Among the factors that slowed global activity were notably global trade tensions, the adjustments
in the automobile industry to adapt to the new European emissions standards, the uncertainty
around Brexit, and the social conflicts in emerging countries.

Within this context of synchronised slowdown, the US economy continued to grow more than the
European for the second consecutive year. The weakening Eurozone, which grew at the slowest
rate since recovery began in 2014 (1.3%), led the ECB to take new measures to inject liquidity
into the banking system, encouraging the concession of loans and providing support for economic
activity, in a context that was free of inflationary pressures.

The neighbouring economies of Spain and France were also caught up in the slowdown. French
GDP recorded a growth rate of 1.5%, lower than the 1.8% in 2018, but slightly higher than
the overall rate for the Eurozone. In 2019, the benefits of the economic measures to increase
household disposable income, in place since 2018, began to be seen, leading to an upturn in
consumption and investment. On the other hand, the context of a global slowdown and trade
tensions played against progress in the French economy by slowing exports. Furthermore, the
strikes against pension reforms lowered growth in the last quarter of the year.

Equally, Spain continued the gentle deceleration that had started in the previous year, although
it was still one of the most dynamic European core economies, with GDP growth of 2% in 2019.
The slowdown came wholly from domestic demand, while the foreign sector contribution picked
Introduction
up after a negative two years, despite weakening global trade.