andorra tourism economy

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Andorra Tourism Statistics

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AD: International Tourism: Receipts as % of Total Exports

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AD: International Tourism: Receipts for Passenger Transport Items

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Tourism in Andorra

Development of the tourism sector in andorra from 1999 to 2021.

Revenues from tourism

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Economy in Andorra

Tourism, the mainstay of Andorra's tiny, well-to-do economy, accounts for roughly 80% of GDP. An estimated 10 million tourists visit annually, attracted by Andorra's duty-free status and by its summer and winter resorts.

Andorra's GDP in 2007 was $3.66 billion, with tourism as its principal component. Attractive for shoppers from France and Spain as a free port, the country also has developed active summer and winter tourist resorts. With some 270 hotels and 400 restaurants, as well as many shops, the tourist trade employs a growing portion of the domestic labour force.

Andorra's comparative advantage has recently eroded as the economies of neighboring France and Spain have been opened up, providing broader availability of goods and lower tariffs. The banking sector, with its "tax haven" status, also contributes substantially to the economy. Agricultural production is limited by a scarcity of arable land, and most food has to be imported. The principal livestock activity is sheep raising. Manufacturing consists mainly of cigarettes, cigars, and furniture. Andorra is a member of the EU Customs Union and is treated as an EU member for trade in manufactured goods (no tariffs) and as a non-EU member for agricultural products.

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Exploring Andorra: A country overview

Analysis of the key factors for taking the decission to live in Andorra

Exploring Andorra: A Country Overview

The hidden Principality of Andorra, nestled high in the Pyrenees Mountains, is a European wonder to be explored. This small nation has been around since pre-historic times and enjoys influences from both Spain and France. Its unique form of co-principality combined with parliamentary democracy sets it apart from other countries in Europe. Come discover all that this remarkable principality has to offer – culture, economy and more!

Key Takeaways

• Andorra is a unique co-principality with prehistoric origins and an evolving political structure.
• The country features picturesque mountains, lush forests, mineral springs and outdoor activities such as skiing.
• Andorran culture offers Catalan language, Roman Catholicism faith, festivals & traditions plus its economy is driven by tourism industry supported by government policies.

Andorra's Unique History

As one of Europe’s smallest countries, Andorra is distinguished by its status as a co-principality. Artefacts from prehistoric settlements have been discovered that date back to the Bronze Age and indicate an advanced urban development for the time. The medieval period brought about two paréages which dictated how the area was ruled and organized politically. These documents established a Bishop of Urgell (in 988) as sharing joint responsibility with France’s President over ruling Andorra – what has come be known as ‘co-princes’.

This unique arrangement affected not only domestic affairs but also foreign relations such within Spain, France and internationally through numerous alliances built via the United Nations, where diplomatic ties are held amongst several other nations in order to ensure peaceful resolution or progress towards common goals. This distinct form of governance continues today under a new constitution ratified on March 14th 1993: preserving history whilst introducing parliamentary democracy alongside it too!

Prehistoric beginnings.

The prehistoric origins of Andorra can be traced back to 4900–4300 BCE, when evidence from sites such as the Tombs of Segudet and Feixa del Moro reveal early settlements in its Neolithic Age. During this time period, those living within the Valley of Madriu would grow cereal crops, care for their livestock while also trading with other regions like Segre and Occitania.

Situated in Canillo Parish is one important archeological complex - Roc de les Bruixes Sanctuary- famed for funerary practices as well as ancient scripture engraved on stone murals. It remains an essential remnant that speaks to country’s past history.

Co-Principality Origins

The Co-Principality of Andorra has existed since the Middle Ages, under control of the Count of Urgell until 988 and then by Roman Catholic Diocese. In 1278 a charter was signed that would shape its current territory and government structure which includes today’s General Council or Parliament. Established in 1866 this replaced what used to be an aristocratic governing body system, providing political representation for all inhabitants across the country.

Throughout centuries before modern times economic activities such as metallurgy production, trade importation were sustained while tobacco cultivation began in 1692 contributing to overall prosperity during later years including Spanish Civil War when numerous refugees from both sides sought refuge here. Several remaining citizens themselves giving rise to increased capitalist development thereafter..

Geographic Wonders

Andorra’s picturesque mountainside location is perfect for tourists who are looking to explore nature. Sitting high atop Coma Pedrosa with an elevation of 2,942 meters, the highest peak in the Pyrenees serves as a stunning backdrop.

The nation is home to abundant natural resources such as forests, rivers and mineral springs that Contribute toward making it a sought after destination for outdoor recreation and conservation efforts alike. This attractive setting makes Andorra ideal for people seeking adventure amid its many impressive landscapes

Pyrenees Mountains

The country of Andorra is situated in the Pyrenees Mountains, with a mean elevation of 1,996 meters. Its land area totaling 468 km2 (181 sq mi) mostly consists of narrow valleys and rugged mountains creating an ideal setting for outdoor activities such as skiing, snowboarding, mountain biking and hiking. Although, nowadays, Andorra is not strictly a country member of the European Union this small yet captivating nation holds many benefits to travelers wanting to experience unique elements from European culture surrounded by its ancient history that are also open those living here permanently. With all these adventures awaiting you plus more opportunities courtesy Of EU membership it’s easy to see why Andorra has become one go-to destination!

Natural Resources

Andorra is rich in natural resources, including 34% forested land and 38.3% of permanent pasture that greatly support its tourism industry as well as environmental conservation efforts. The Andorran government takes responsibility for managing these valuable assets to guarantee their use can be sustained over the years for everyone’s enjoyment - from skiing down the Pyrenees mountains or strolling through forests, rivers and mineral springs can all be enjoyed when visiting this beautiful nation. They have ensured those wonderful activities will remain available by preserving such precious sources sustainably so generations may enjoy them too!

Cultural Insights

Andorra is a nation which boasts of a varied culture encompassing the official language, Catalan as well its capital city Andorra la Vella. Spanish, Portuguese and French are widely spoken in this country too. Roman Catholicism serves as the main religion within it with Our Lady of Meritxell being held up as patron saintly figure. A plethora of festivals celebrated throughout the year such at contrapàs dance or marratxa demonstrate its vibrant cultural life . Skiing , snowboarding and mountain biking dominate most winter sports activities occurring both locally and through tourism to ski resorts there located around many parts for visitors from all over world to enjoy! Football , rugby basketball also contribute towards making recreation an important part of everyday existence in Andorra’s inhabitants lives .

Language and Religion

As the official language, Catalan serves as a key unifying element among Andorra’s various cultures. Its position near Spain and France has resulted in Spanish, Portuguese and French being widely spoken within the country’s borders too.

Religion also plays an important role for citizens of this nation. Roman Catholicism is by far predominant faith that many adherents practice with Our Lady of Meritxell providing additional religious importance to their culture.

Festivals and Traditions

Andorra offers a captivating glimpse into its rich cultural heritage through the many festive occasions it hosts annually. From May’s Canólich Gathering to July’s Roser d’Ordino and National Day of Andorra (Meritxell Day) celebrations, there are endless opportunities to explore the nation’s long-standing traditions.

Visitors can enjoy traditional folk dances like contrapàs and marratxa which offer an entrancing visual spectacle full of color that displays aspects from days gone by in this quaint corner of Europe.

Sports and Recreation

Andorra’s stunning landscape and top-notch facilities make it an ideal place for sports and leisure pursuits. It is renowned around the world for its ski resorts, drawing in hordes of visitors during winter who are searching for exceptional skiing and snowboarding experiences. Football, rugby, basketball - all these come together with a successful national team that competes on international level – plus activities like hiking, biking or rock climbing as well can be found here amidst the breathtaking scenery of Andorra.

Economy and Industry

The economy of Andorra is based on its thriving tourism industry, powerful banking sector, and flourishing financial services. Its ski resorts and picturesque landscapes attract around 10 million visitors every year to the country. This has had a positive effect on economic growth thanks to strong trade connections with Spain and France To membership within the World Trade Organization (WTO) as well as other ratified international agreements regarding commerce between countries.

In regards to imports/exports there is an emphasis placed upon machinery, vehicles, pharmaceuticals products like tobacco goods or electrical machinery along with jewelry too which have all been integral parts of contributing towards forming Andorra’s overall economics position both at present day but also for future generations looking forwards still. The relationship that exists through these different factors allow this small nation state not only prosperous opportunities amongst multiple industries but it will continue helping build stronger relations abroad concerning global markets moving into 2021 onwards from here now too .

Tourism Sector

The ski resorts in Andorra have made tourism a primary source of income for the country, as people from all around the world flock to see its stunning landscape and use its renowned skiing facilities. To ensure continued success in this industry, government policies are being used to stimulate growth throughout it while also offering visitors other outdoor activities such as hiking, biking and rock climbing – not forgetting shopping at some duty-free stores! As these efforts remain ongoing into future years, with attention given specifically towards maintaining efficient establishments that provide accommodation etc. - we should expect great things ahead when it comes to bringing money through tourism into Andorra’s economy.

Banking and Financial Services

The economy of the Principality of Andorra is greatly benefited by its well-developed and modern financial sector, particularly in terms of banking activities and services. Delivering telecommunications such as fixed telephone systems, mobile phones connections, internet service are provided through one main national provider known as STA or “Andorra Telecom”.

In recent years certain measures were taken from Andorran authorities to alleviate their traditional banking secrecy laws while personal income tax was implemented. These changes strengthen its standing on a global scale making it an attractive destination for many businesses offering commercial bank accounts along with investment advice/management asset protection planning and wealth management solutions which can be accessed via institutions like Morabanc Credit Andorrana or ‘’Andbank’’.

These modifications have been very important tools used by this principality allowing them to keep up with international trends thus contributing even more powerfully into the nation’s financial growth.

Trade Relations

Spain and France, who are major trading partners with Andorra, maintain strong economic ties. These relations have become a vital factor in the nation’s thriving industry landscape. Enabling it to remain competitive on an international scale. As part of its continued growth efforts, Andorra is involved in several organizations such as the World Trade Organization (WTO) for aiding beneficial trade prospects among other countries.

In terms of imports and exports from this country many items including machinery components like vehicles parts ,electrical systems plus pharmaceutical products & tobacco goods can be found here alongside jewelry pieces .These transactions between Spain/France and Andorra provide important resources that continue sustain their prosperous economy by supplying them valuable services or materials needed economically today .

Both nations share mutually stable business connections which allows export exchange since they both import industrial supplies being shipped out around Europe allowing better costumer service creating more demand locally helping each respective economies overall productiveness also bring exponential increases consumers satisfaction rates providing long-term stability throughout multiple markets worldwide

Government and Politics

Andorra is a distinctive nation with its own special system of government, combining co-principality and parliamentary democracy. the president of france and the bishop of urgell are the country’s two co-princes, their roles mainly ceremonial. meanwhile andorran parliament (known as general council) carries out legislative duties. it has 28 members who represent seven administrative parishes along with one single national constituency that all citizens can vote in..

The nation’s judicial branch works according to both civil law principles and customary practices, with different courts tending to varied aspects related to this field: Constitutional Court serves for interpreting Constitution rulings while High Court deals mostly criminal/civil cases matters whereas Administrative Court handles appeals against public authorities’ decisions lastly Tribunal Corts resolves disputes regarding civil or commercial issues.

This blended mix between sovereignty principle governing body representation by people AND mixed legalities have shaped unmistakably what makes Andorra a unique European state!

The Bishop of Urgell and the French President, who serve as co-princes in Andorran governance, primarily perform ceremonial duties. This arrangement speaks to a unique relationship between both Spain and France that has been preserved through centuries of history. The two countries are connected by these powerful symbolic figures signifying political stability within this small nation’s borders. Despite playing largely ornamental roles, they bear witness to an enduring bond shared with neighboring nations through their presence alone.

Parliamentary Democracy

The parliamentary democracy of Andorra has a multi-party system, with regular elections for the unicameral legislature -the General Council. The 28 members who make up this legislative body represent seven administrative parishes and also one single national constituency so as to provide representation for all its citizens. These individuals not belonging to the general council do not hold any decision making power in regards to their country’s matters. Thus ensuring that people have an influential say in government affairs and that governance is equal among all parts of the population.

Legal System

The Constitutional Court, responsible for interpreting the Constitution and evaluating appeals against laws or treaties that may be unconstitutional is a key figure in upholding Andorra’s legal system. This framework combines both civil law from France as well as Spanish customary law, guaranteeing individuals their rights while underlining democracy within the nation. It provides an extensive structure which allows justice to be dispensed properly throughout this country of two countries’ shared judicial roots.

Communication and Media

The communication and media sector in Andorra has greatly advanced, offering those living there or visiting the country a range of radio, TV and printed outlets as well as state-of-the art telecommunications infrastructure. SOM (STA) is the national telco provider providing basic services such as mobile phone network access, landline connections plus internet connectivity.

At present, individuals can find publically available broadcasters to listen to alongside commercial ones on air with newspapers - both local & global news publications – Magazines that focus on current affairs for everyone’s convenience.

Telecommunications

The Telecommunications sector of Andorra is connected to France and Spain, with a national company that provides mobile, fixed-line telephone and internet services. STA (Andorra Telecom) or SOM takes charge in sustaining as well as improving the telecommunications system throughout the country so that people living there can use modern communication tools and acquire access to numerous facilities. This firm has been responsible for offering up-to-date technologies along with related services around each corner.

Radio and Television

In the country of Andorra, there are a variety of public and commercial radio stations as well as television broadcasting networks. This includes RTVA (Radiotelevisió Valenciana) that is available through digital terrestrial TV and IPTV to provide local news, entertainment, and sports programs for viewers. Radio Nacional d’Andorraand Flaix FM bring their listeners music selections along with talk shows about current events in the area. These multiple channels ensure access to different content that caters to varied tastes across all ages living within Andorra’s borders.

Andorra offers citizens a broad range of print media to keep up with current events in the nation and abroad. Three daily newspapers, Diari d’Andorra, El Peridic d’Andorra and Bondia provide reliable news coverage while Bon Dia and Ara Andorama are popular magazines for readers looking for additional information about their country or other parts of the world. This selection ensures that residents have plenty access points into staying informed on international developments as well as local updates.

Andorra’s remarkable history and culture as a co-principality, along with its beautiful natural surroundings, make it an unforgettable destination. As one of the oldest existing parliamentary democracies in Europe today, Andorra continues to build strong connections with neighbouring countries whilst maintaining a vibrant economy amidst stunning landscapes filled with captivating festivals and activities. By exploring this incredible principality travelers can see first hand how resilient the people here are when faced by changing circumstances while also enjoying all that this unique place has to offer!

Frequently Asked Questions

Is andorra officially a country.

The small nation of Andorra lies in the Pyrenees mountain range, sandwiched between France and Spain. Covering an area of 468 square kilometres, it is home to a population estimated at 77,000 people. Making it officially recognized as a country.

Is Andorra a rich or Poor country?

The small, landlocked country of Andorra boasts a wealth that surpasses its neighbours - Spain and France – with the per capita income exceeding both European averages.

Is Andorra more French or Spanish?

It is obvious that Andorra has a more prominent Spanish influence than French, since 49% of the population are Andorrans and 25% Spaniards compared to just 4 percent being French.

Is Andorra Hispanic?

People of Andorra mostly hail from Catalonia, with some having Spanish, Portuguese and French backgrounds. Their official language is Catalan which makes it a Hispanic nation.

What is the official language of Andorra?

Catalan is the official language of Andorra, alongside French, Spanish and Portuguese. All these languages are used in various aspects such as media outlets, education and other official documents within the country. The four languages have significant presence throughout its territory ensuring communication among citizens no matter their origin or native tongue.

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Andorra: Economic Outline

Economic indicators.

Andorra's economy is dependent on foreign trade and relies primarily on tourism, commerce, and financial services. Growth has picked up slowly in recent years but remains sensitive to external impacts: as such, it was severely hit by the COVID-19 pandemic but rebounded ever since. In 2023, the Andorran economy displayed resilience, surpassing its long-term potential growth rate despite facing external challenges. According to the IMF, the economy expanded by an estimated 2.3% last year, primarily propelled by the service sector and a notable influx of tourists. Looking ahead, GDP growth is anticipated to decelerate to around 1.5%, aligning more closely with its lower long-term potential. Projections indicate real GDP growth at 1.8% for 2024 and sustaining at 1.5% from 2025 onward, mirroring the average growth rate in the euro area. Andorra's public finances are generally sound, and low levels of general government debt provided the authorities with ample space to respond to recent external shocks. Despite persistent inflation and a positive output gap, the government maintained primary fiscal surpluses while moderately increasing public investment, particularly in social housing, throughout 2023. The primary balance surplus was estimated at 0.9% of GDP, with an overall surplus of 0.4% of GDP. In 2022, Andorra finalized its debt management strategy by issuing EUR 1.2 billion in Eurobonds. This move enabled the government to extend the maturity of its debt under favorable rates and broaden its financing sources. The government is projected to sustain primary balance surpluses of approximately 1% of GDP in the medium term. This trajectory is anticipated to lead to a reduction in debt to around 30% of GDP by 2027. On average, Andorra's significant current account surplus is nearly equally supported by net exports and net primary income. Tourism exports serve as the primary driver, leading to a larger trade surplus in services compared to the trade deficit in goods. This dynamic culminates in a positive overall trade balance for Andorra. Although private banking typically yields lower returns, In 2022, inflation surged to 6.2%, driven by significant increases in energy and food prices within the region, along with minor contributions from supply limitations and a slightly positive output gap. In 2023, headline inflation moderated to 5.6%, influenced notably by global fuel prices. The IMF expects inflation to decline further, to 4.3% this year and 2.4% in 2025. Andorra's economy is based on its services sector (78.1% of GDP), notably tourism, real estate, and finance (World Bank, latest data available). The banking sector is relatively large when compared to the country’s size, with the total banking assets representing around 6 times the nominal GDP, which may pose risks to the economy and the government's balance sheet, although these risks are mitigated by the high liquidity of the system and newly-created FX reserves. Andorran banks saw profitability climb to an annualized ROA of 0.8% in 2023Q3, compared to 0.6% in 2022 and 0.5% in 2021. This increase in profitability was propelled by higher interest margins, surpassing those of European counterparts (IMF). A steady rise in workforce demand drove domestic labor participation and employment levels above those seen before the pandemic. A substantial increase in residents, nearly 8% over two years, largely due to immigration, helped meet this heightened labor demand. However, this only partially addressed the growing demand, as job vacancies increased across sectors, particularly in hospitality. Although Andorra historically maintained low unemployment rates, around 2%, recent labor market tightness has been exacerbated by shortages, notably in neighboring countries' service sectors. By 2023Q3, unemployment dropped to 1.2%, with only 266 individuals unemployed—among the lowest rates in Europe and consistent with Andorra's historical levels. Government-mandated increases, totaling close to 15% in the minimum wage during 2022–23, aimed to offset workers' loss of purchasing power while also ensuring competitiveness in the Andorran labor market. Andorra's income per capita is higher than the European average, and the country has one of the highest life expectancy rates in the world. As a result, the urban environment in the Principality is safe, the healthcare system is well-developed, and the education system is trilingual (Catalan, French, and Spanish).

Source: World Bank - Latest available data.

Main Sectors of Industry

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Indicator of Political Freedom

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Political freedom in the world (interactive map) Source: Freedom in the World Report, Freedom House

Indicator of Freedom of the Press

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

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Economy in Andorra: Discover an engine of opportunities

Andorra is a small country with just over 400 square kilometers between Spain and France . Despite its size and past as a tax haven, the economy in Andorra has grown by leaps and bounds in recent years. This has made it one of the preferred destinations for investors and digital nomads.

What is the economy like in Andorra?

Why is Andorra becoming the preferred destination for investors and companies? One of the main reasons is the economy . Andorra’s economic growth is booming. It is estimated that between 2022 and 2027, the Principality’s economy will surpass that of its neighbors Spain and France, but also the average of the European Union countries.

For example, if we analyze the Andorran GDP , we find that in 2022, this indicator grew by 9%, and it is expected that for the following years (until 2027), it will increase by up to 1.8% . To make these estimates, the economic forecasts of the countries around Andorra have been taken into account and follow the provisions of the International Monetary Fund (IMF).

As for inflation , another indicator that allows us to measure the economy’s growth in Andorra, we find that, compared to its neighbors and the EU , inflation remains low. To give you an idea 2019, Andorran inflation stood at 1% . While in 2020, the CPI suffered a deflation of 0.2%.

Certainly, let’s discuss the economy in Andorra.

Andorra is a country that, in 2021, began to experience considerable economic growth. After the hiatus caused by the pandemic, the fiscal year closed with a 3.3% increase in the CPI . However, the cost of living in the country increased (as in the rest of the countries) due to the behavior of the prices of services such as electricity, water, and housing .

Even so, and despite inflation, Andorra has always been below Euro Zone countries in this regard. Thus, inflation in the Principality for 2023 is expected to close at 4.7% , one point below EU countries.

Andorran banking system

To understand the economy in Andorra, it is very important to talk about the country’s banking system . At the end of 2018, the Principality ceased to be considered a tax haven . For years, firms holding shares in foreign companies were taxed at 2%, which was detrimental to the rest of the countries.

Moreover, in 2017, various transparency agreements with more than 50 countries came into force, and Andorra abandoned the banking secrecy that, until then, had protected undeclared fortunes in the countries of origin. As a result, it agreed to exchange customer banking information between financial institutions and EU and OECD countries.

Although there are only three banks in Andorra , you will be surprised to know that these entities closed in fiscal year 2022 with a growth of 16% and 113 million euros . The Andorran banking business model is sustainable and profitable, with an ROE of 7.62% and a solvency of 15.76% . The bank has a liquidity ratio of 201.29% , above the European banking average. Banking has been decisive for the growth of the Andorran economy, as it also has a low default ratio of 3.28% .

Diversification of the economic model

For many years, tourism and the economy in Andorra were two concepts that went hand in hand. Tourism and commerce were the main sources of income for the country. However, a few years ago, the government wanted to diversify the economic model to not depend exclusively on these two economic activities. This has been possible thanks to the approval of the Digital Economy, Entrepreneurship, and Innovation Law .

His provision favors digitalization and the creation of special economic zones to attract business investments with incentives. In addition, it offers aid for investment and development. In this regard, the Strategic Commercial Plan was also launched, which seeks to improve the competitiveness of the (commercial) sector through innovation and digitalization.

Investment: one of the pillars of Andorra’s economy

Although it is no longer a tax haven, Andorra is still a very attractive destination for investors due to its low taxation. The general VAT (IGI) is 4.5% compared to the 21% paid in Spain . But in addition to this tax, there is low corporate and income taxation, which does not exceed 10% . Why is Andorra a good investment destination?

The low taxation of the country, as well as its excellent health system , has made the Principality one of the preferred destinations for investors. Added to this is the proximity to France and Spain and the excellent quality of life (it is one of the countries with the highest life expectancy). 

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• What Are The Biggest Industries In Andorra?

Andorra is a microstate in Europe , located on the Iberian Peninsula , in the east of Pyrenees Mountains. Officially the Principality of Andorra, it covers an area of 181 square miles and has a population of 77,281, ranking as the 6th and 16th smallest country by area in Europe and the world respectively, and the world's 11th least populous. Andorra la Vella is the capital city of Andorra and is the highest city in Europe, located at an elevation of 3,356 feet above sea level. Catalan is the country's official language , although other languages such as Portuguese, Spanish, and French are commonly spoken in Andorra. With approximately 10.2 million visitors each year, tourism is the backbone of the country’s economy, as it accounts for about 80% of Andorra's gross domestic product (GDP). 

The Rise of Andorra’s Economy

Given its isolation in the Pyrenees Mountains , small population, limited resources, and lack of proximity to major trade routes, Andorra's economy has historically been small. However, Andorra experienced rapid development in the latter half of the twentieth century due to its growing tourism industry and the state's status as a duty-free zone. Both factors contributed to the growth of the nation's retail sector, which is popular among visitors from Spain and France . The tourist and retail industries also attracted many immigrant workers from Portugal , France, and Spain, which in turn contributed to a rapid increase in Andorra's population. As a result of this growth, the country was challenged with controlling rapid urban development. For example, some local governments now limit the number of new buildings allowed to be constructed. While Andorra is not a member of the European Union (EU) , it enjoys a unique relationship with the EU, in which it is treated as a member when dealing with manufactured goods but not agricultural produce. Following the implementation of the Single European Market in the 1990s, the state lost its duty-free status, although retail items remain less expensive in Andorra compared to neighboring countries. Andorra has 167 miles of roads, of which 123 miles are paved, and has no railroads or airports due to its terrain. In fact, the nearest international airport is located about 112 miles away in France.

Biggest Industries

Agriculture.

Andorra’s natural resources are relatively limited but include potential hydroelectric-power, mineral water, lead, timber, iron ore, and hot springs, which have resulted in the creation some of Europe's biggest health spa resorts. Due to its mountainous landscape, farming is limited. In fact, only 2% of land in Andorra is suitable for farming. Nevertheless, the cultivation of cereals such as barley, wheat, rye, and oats, as well as the rearing of cattle and sheep, occurs in the Valira Valley. Rivers in the country provide irrigation water for small vegetable and tobacco fields, and most farmland is used for hay production. Tobacco is the most lucrative crop, and it occupies 8% of the total farmland. Varieties of tobacco cultivated include Andorran tobacco and eastern tobacco. The country has an estimated 1,100 cattle and 9,000 sheep, and meat production has experienced a slight increase in recent years. The majority of Andorra's food must be imported in order to meet local demand.

Manufacturing

Andorra's primary manufactured goods include furniture, cigarettes, and cigars for export. Cigarettes are much cheaper in Andorra than in France or Spain due to the nation's status as a tax haven. As a result, the smuggling of cigarettes out of the country has become a significant challenge, especially during the 1990s, as smuggled cigarettes accounted for 15% of all cigarettes in Spain. The issue resulted in intense political and diplomatic pressures on the Andorran government by the EU and member states. Consequently, the proportion of contraband cigarettes in the Spanish market dropped to 12% in 1997 and 5% by 1999. Other measures introduced to reduce smuggling included sealing the Andorran border and introducing patrols on the hills and valleys.

Services, Trade and Tourism

The services sector is the largest component of Andorra's economy. In particular, tourism accounts for more than 80% of GDP. Visitors, especially from Spain and France, flock to the nation year-round to shop for goods such as watches, cigarettes, electronic goods, and jewelry. Tourists also visit the country during the winter to ski at various resorts such as Soldeu. Other tourist attractions include the small glacial lakes that dot Andorra's mountain landscape. The largest glacial lake is Lake Juclar, which covers an area of 28 hectares and attracts thousands of tourists who want to experience its unspoiled nature. The country receives more than 10 million foreign visitors each year, which is the highest tourist per capita ratio in the world. Additionally, Andorra contains 270 hotels and 400 restaurants that employ a significant portion of its labor force. The country is also a center for financial and banking services due to its status as a tax haven. Andorra imports most of its consumer goods, especially from Spain and France. For example, in 2006, 53% of imported goods came from Spain while 21% came from France. The total value of goods imported that year was estimated at $1.9 billion, while Andorra exported services and goods valued at $ 148.7 million. Spain is the country's biggest export market, accounting for 60% of Andorra's exports in 2006, while 17% of exports went to France.

Economic Prospects

Andorra's economic growth rate has historically been difficult to predict. However, in recent years Andorra has experienced a steady growth rate, which was estimated at 3.5% in 2005. The country's fiscal position has also improved considerably, as its rating by Standard & Poor's increased from "AA-" to "AA." The Andorran government is attempting to further integrate with the European Union in order to continue its economic stability and growth. Incentives introduced in hopes of boosting the economy include financial support for entities that establish tourist facilities within the country. Andorran banks also attract a significant number of foreign investors and depositors due to the country's lenient tax regime and bank secrecy laws.

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Boosting public investment would catalyze the post-pandemic recovery by fostering employment and economic activity and facilitating the transformation toward more resilient and greener economies. As the focus shifts toward securing an economic recovery, Andorra should aim to reverse the declining public investment trend by building on the already well-developed sectoral strategies to scale-up and fast track some of the planned investments. The near-term focus could be on reassessing implementation of the existing pipeline of projects, advancing digital transformation, and diversifying the tourism sector. In the medium-term, adapting to climate change could include artificial snowmaking to help keep ski resorts remain open during warmer winters, and advancing the energy transition initiatives. Analysis shows that the real GDP level could be 3 to 6 percent higher in the medium-term, compared to staff’s baseline projections, with a faster return to the precrisis unemployment rate.

Public Investment to Catalyze Andorra’s Recovery 1

Boosting public investment would catalyze the post-pandemic recovery by fostering employment and economic activity and facilitating the transformation toward more resilient and greener economies. As the focus shifts toward securing an economic recovery, Andorra should aim to reverse the declining public investment trend by building on the already well-developed sectoral strategies to scale-up and fast track some of the planned investments. The near-term focus could be on reassessing implementation of the existing pipeline of projects, advancing digital transformation, and diversifying the tourism sector. In the medium-term, adapting to climate change could include artificial snowmaking to help keep ski resorts remain open during warmer winters, and advancing the energy transition initiatives. Analysis shows that the real GDP level could be 3 to 6 percent higher in the medium-term, compared to staff’s baseline projections, with a faster return to the precrisis unemployment rate .

1. Andorra’s public investment has been on a declining trend, in line with developments in most advanced economies . General government public investment has declined from 24.3 to 5.7 percent of GDP and from 6.4 to 2.5 percent of GDP between 2000 and 2020 (see Figure 1 ). This trend is in line with the decline observed across countries in the European Union (EU) and other advanced economies. Andorra’s public capital stock, however, remains smaller than in many of its peers.

Stylized Facts on Public Investment

Citation: IMF Staff Country Reports 2021, 108; 10.5089/9781513573168.002.A002

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2. The COVID-19 crisis adds to the importance of modernizing and revamping existing infrastructure to meet current and future challenges . As the health crisis resolves, and the focus shifts from saving lives and providing lifelines to households and businesses, the government should aim to reverse the declining public investment trend that started even before the pandemic. With the right policies, the post-pandemic economy could be more resilient, inclusive, and greener. Done in a timely manner and safeguarding quality, public investment could play a central role in the recovery. Despite their high costs, investment projects that maximize social payoffs also preserves fiscal space as they are temporary in nature and could lead to future increases in fiscal revenue.

3. Advanced economies benefiting from lower nominal interest rates and low inflation can more easily scale-up investment but should balance the benefits with worsening debt dynamics . High-quality investment projects could benefit from even more favorable terms as the assets created generate taxable returns which are priced into the sovereign risk. Moreover, with large economic slack, public investment could have a larger impact than in normal times, including through larger crowd-in of private investment. However, these potential effects should be balanced with the risk of abrupt changes in global market sentiment, worsening debt dynamics amid still-high spending needs, and the degree of uncertainty about the economic recovery.

• Andorra’s Initial COVID-19 Response: Impact on Public Investment

4. As the COVID-19 crisis started to unfold, Andorra’s immediate focus—as in most of the world—was to address the health emergency and provide support to households and businesses . The government passed an extraordinary budget in March 2020—hereafter denoted ‘2020 COVID-19 budget’—incorporating measures to address the health and economic crisis amounting to €65 million (2.6 percent of GDP), consisting of relaxation of tax obligations, increase in health spending and current transfers to households and business, and direct support to select public enterprises. This was achieved through a combination of reallocation of expenditure and borrowing to compensate for the decline in domestic revenue and higher spending needs.

5. The expenditure reallocation needed to achieve the pandemic-related urgent needs weighed heavily on reductions to public investment, causing major disruptions in some ongoing and planned projects . Compared to 2019 outturn, public investment (including capital transfers) was set to increase by 0.16 percentage points of GDP in the 2020 pre-COVID-19 budget ( Figure 2 ). However, the 2020 COVID-19 budget saw a reduction in public investment by 0.45 percentage points of GDP, with a preliminary outturn showing an actual reduction by 0.36 percentage points of GDP. Although the change across countries in the EU is widespread depending on countries’ circumstances, the drop is nonetheless more drastic in Andorra. The 2021 budget sets the total expenditure size at a level similar to the 2020 pre-COVID-19 budget. However, capital expenditure (including capital transfers) is expected to decline by 15 percent (€13 million, or 0.5 percent of GDP) compared to the pre-COVID-19 plan for 2020 to compensate primarily for the additional necessary increase in transfers to the health and social sectors (see tables in Figure 2 ).

COVID-19 Impact and Response

• Boosting Andorra’s Public Investment: Priority Areas and Synergies

6. As pandemic-related spending is rolled back, public investment should be rapidly scaled up and, when feasible, planned projects brought forward starting in the second half of 2021 . A fiscal stimulus led by the general government from an additional 1 percent of GDP in investment spending per annum in 2021 to 2023 would outweigh the cost and have a high multiplier effect on output (see Annex V in the Staff Report ( IMF, 2021 )). During the partial reopening (between 2021–22) the focus should be on: (i) maintenance of existing infrastructure; (ii) ready for implementation projects; and (iii) small-sized but job-intensive projects. During the post-pandemic period (between 2022–2023) the focus should be on big, transformational projects with large long-term multiplier.

7. The investment package should build on the multiple well-developed sectoral strategies prepared by the government and these can potentially be fast-tracked or scaled-up or both . The priority areas are the following:

Disrupted (but still relevant) projects and newly identified ones : bringing back on track projects disrupted by the crisis that are still relevant, as well as newly identified ones such as key construction projects primarily led by the Ministry of Land Use Planning. Some examples include the Multifunctional Building (€35 million, partially funded), the National Heliport (through administrative licenses to the private sector), and the National Epidemiology Laboratory (costs to be determined). Other small projects that have been cut, but are still relevant, for a total cost of €7 million should also be reconsidered in the short-term. Road maintenance has not been disrupted and has partially outweighed the impact of the decline in public investment overall.

Tourism : investments to de-seasonalize the tourism sector, attract tourists from multiple destinations and interests, and to differentiate Andorra by continuing to strengthen the country’s brand are considered key priorities for both the public and the private sector. While in Andorra the bulk of the investment in the hospitality sector is undertaken by the private sector, the government plays a key role in the coordination, training, marketing, and some public investment needs for the sector. There is potential to scale up the role of the central government, including through some real investments and capital transfers to local governments and to other institutions.

Digital transformation : as part of the Government’s Horizon 2023 Strategy, the authorities are committed to digitalize government operations and the economy in the coming years. A new law on digitalization has been adopted, and the country is working to further align its digitalization program with EU practices. The authorities have developed an action plan and a strategic roadmap with over one hundred initiatives identified by priority levels with an estimated cost between €15.5 million and €18.5 million. The framework is built on two pillars: global digitalization and digital governance structures; and includes interventions on e-government, e-trade, e-tourism, e-trade, e-mobility, e-education, e-citizen, and e-justice. Fast-tracking and fully funding the entire program would contribute to the proposed boost in public investment and improve efficiency in the country.

Transportation and mobility : including through road maintenance, greening transport, and cross-border connectivity in the medium-term. The government is exploring different options to increase cross-border connectivity, including the construction of a national airport or a railway line to connect Barcelona with the Andorran ski resorts via Seu d’Urgell (Catalonia, Spain). Moreover, the authorities have plans to transition toward more sustainable local transportation methods, by increasing incentives to use public transportation and shared mobility schemes (such as bike and carsharing), as well as more energy efficient means.

Climate change adaptation and mitigation : as a microstate, Andorra would need to adapt and build its resilience to climate change. Warmer winters and lower precipitation are impacting snow production and ski seasons, a sizable part of the Andorran economy. The authorities are taking positive steps at climate mitigation with a carbon tax and by improving energy efficiencies by retrofitting existing public buildings (at an estimated cost of €1 million per building). On top of these useful initiatives, the central government could take steps toward climate adaptation by increasing its share in snowmaking investment (both in water reservoirs and snowmaking machines), which could increase winter tourism resilience. Moreover, by improving the long-term resilience of ski-tourism, the additional public investment could boost private investment, which is currently lackluster.

Andorra: National Digitalization Program—Cost Estimates

8. The Andorran central government works in close coordination with different government agencies and the private sector . Real investments have the highest fiscal multiplier (and are at the core of this analysis), but increasing capital transfers to local governments—as well as directly or indirectly to the private sector—and continued collaboration with the well-functioning State Owned Enterprises (SOEs) Forces Elèctriques d’Andorra (FEDA) and Andorra Telecom will also aid in the economic recovery and support long-term growth. While the central government does construction and maintenance of main roads and buildings, local governments are responsible for local and secondary roads as well as investments under their competencies at the local level (i.e. library, local theater, etc.), and continued collaboration with them will be beneficial for the country.

9. Indeed, beyond the central government, FEDA and Andorra Telecom are at the forefront of the energy transition and digitalization of the country and driving the transformation . For the purpose of this note, the investments of the state-owned enterprises are subsumed under private investments. FEDA’s investment plan for 2021–25 amounting to €128 million aims to increase the production of renewable energy and develop new infrastructures to help the country manage peak energy demand. It includes projects on electrical grid, renewable electricity generation, cogeneration and district heating, and efficiency and sustainability. The plan has a small financing gap of about 10–15 percent of the cost, but financing for the rest is secured. Andorra Telecom has a detailed investment plan to be implemented in 2021–24 amounting to €75 million, which is fully funded, aiming to revamp the telecommunication infrastructure of the entire country. The authorities should explore opportunities to fast-track and scale up some of these projects and to fill potential financing gaps.

• Boosting Andorra’s Public Investment: Impact on the Economy and Public Debt Sustainability

10. In determining the size and composition of the fiscal stimulus, job creation is an essential criterion . Using the estimates for job content in different country groups presented in the October 2020 IMF Fiscal Monitor, and assuming an increase in public investment package of 3 percent of GDP based on the government’s strategies already developed, the job intensity of the public investment stimulus package is estimated. The government of Andorra could create over 500 direct jobs—over 1 percent of the labor force bringing the unemployment rate half-way to the pre-crisis level—and additional jobs indirectly depending on how much additional demand is created and the share of skilled/unskilled labor component of the investment projects selected. “Green” investments are often relatively job-intensive and should therefore be at the forefront of the government’s recovery package.

11. Moreover, public investment tends to have larger short-term multipliers than public consumption, taxes, or transfers; and it is usually larger than one . Some of the factors increasing Andorra’s investment multiplier include: (i) the fact that it is an euroized economy, which makes monetary policy less responsive; (ii) the current macroeconomic conditions as multipliers are larger in recessions and this is the deepest recession in decades; and (iii) having public debt at sustainable levels. Moreover, with the high uncertainty surrounding the recovery path, a boost in public investment would help to anchor confidence in the recovery and increase the multiplier as the private sector sees the stimulus as a commitment from the government to resolve the crisis and to create a more resilient economy. Other factors that affect Andorra’s public investment multiplier in ways that could be either positive or negative include: (i) the size and openness of the economy, as there are some potential leakages to other countries through employment and trade; and (ii) the quality of investment projects and health of the private sector balance sheets, which would be specific to each project or firm.

Andorra: Estimated Job Creation of a Public Investment Stimulus

12. The boost in public investment would support the recovery and long-term potential growth . An increase of around 1 percent of GDP per annum in 2021–2023 could lead to an estimated real GDP level between 3.1 percent and 6.2 percent higher by 2026—assuming a public investment multiplier between 1 and 2—than under the baseline scenario ( Figure 3 ). The range for multiplier is in line with the economic literature and with the authorities’ estimates of “drag effect” of each production sector using input-output matrix for Andorra. The latter finds that each €1.00 spent generates between €1.33 and €1.92 in production and is highest for construction, manufacturing, artistic and leisure activities, and finance and insurance ( Figure 3 ). Sectors with high dependency on tourism have the highest multiplier in Andorra given the tourism sector’s direct and indirect contribution to economic output and the high interdependency of the whole economy on this sector.

Impact of Higher Public Investment on Output

13. Public debt is set to remain sustainable, but financing options will have to be carefully assessed to prevent a deterioration of debt dynamics with costly large infrastructure projects . Assuming additional borrowing of €100 million in 2022 to finance the proposed public investment boost, while taking advantage of the favorable international financial conditions, allows Andorra to keep its debt dynamics at sustainable levels (Annex V in the Staff Report ( IMF, 2021 )). The debt to GDP ratio peaks in 2021 at 56.7 percent and declines rapidly afterwards, as in the baseline scenario. The government of Andorra can bring the stock of debt below the fiscal debt limit of 40 percent of GDP by 2025 in the investment scenario, compared to 2024 in the baseline scenario.

International Energy Agency. ( 2020 ). Sustainable Recovery . World Energy Outlook Special Report . Paris : IEA . Retrieved from: https://www.iea.org/reports/sustainable-recovery .

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International Monetary Fund . ( 2020 ). Fiscal Monitor: Policies for the Recovery (Chapter 2) . Washington, D.C. : IMF . Retrieved from: https://www.imf.org/en/Publications/FM/Issues/2020/09/30/october-2020-fiscal-monitor .

International Monetary Fund . ( 2021 ). Principality of Andorra: Staff Report for the 2021 Article IV Consultation . Washington, D.C. : IMF . Retrieved from: www.imf.org .

Popp , D. , Vona , F. , Marin , G. , & Chen , Z. ( 2020 ). The Employment Impact of Green Fiscal Push: Evidence from the American Recovery Act . NBER Working Paper 27321 . Cambridge, MA : National Bureau of Economic Research .

Prepared by Michelle Tejada (EUR).

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Andorra - International Tourism, Number Of Arrivals 2024 Data 2025 Forecast 1999-2020 Historical

International tourism, number of arrivals in andorra was reported at 5207000 in 2020, according to the world bank collection of development indicators, compiled from officially recognized sources. andorra - international tourism, number of arrivals - actual values, historical data, forecasts and projections were sourced from the world bank on july of 2024.,   gdp,   government,   taxes,   climate.

New middle class, hedonism and visa ease: The economic reasons behind the boom in global tourism

International organizations predict that the industry’s global economic contributions will reach historic highs.

Madrid, Tokyo, Doha, the islands of Fiji — no world region will remain untrammeled by tourist footsteps in 2024. Just between January and March, 285 million people traveled to an international destination, 20% more than during last year’s first quarter, according to United Nations Tourism. Bottled-up demand thanks to the continuing Covid-19 pandemic, rise in airline connectivity and the recovery of Asian countries will contribute to a 2% rise in passenger numbers as compared to pre-pandemic figures, according to forecasts. Last year, tourism’s contribution to the global economy rose above $3.2 billion, equal to 3% of the global gross domestic product. That number will rise even higher in 2024 if things play out in accordance with expert predictions.

A long list of economic and political factors is in the industry’s favor. The most notorious of them is heightened demand, which appears to be unsated despite three years having passed since Covid paralyzed the world, causing borders to be closed to an extent that had not taken place in recent memory. This is what experts have dubbed a “champagne effect,” according to Juan Molas, president of the Spanish Tourism Board. “There are so many people who haven’t been able to carry out the activities associated with travel and tourism over the past four years. Now that they have the opportunity, they want to take advantage of the moment, and spending rates reflect that,” he says. And though everyone wants to travel, if you had to point out on a map where the majority of tourists are coming from, you’d be gesturing towards China, United States, Germany, United Kingdom and France. In 2023, those were the countries that spent the most amount of money on vacations, although emerging markets like India and South Korea also appear on the list. Analysts agree that the recovery of the Asian market and the expansion of a middle class with buying power in developing economies are the two driving forces behind the new tourism craze.

According to the McKinsey consulting firm, in 2030, 40% of China’s population will belong to the middle class, which amounts to an increase of 200 million people compared to today’s figures. Similarly, India, the most-populous country in the world with more than 1.4 billion inhabitants, is home to a middle class that will grow by 250 million people over the next decade, according to the India Brand Equity Foundation. “These enormous numbers will have important repercussions when it comes to the global tourism industry, because they represent new travelers who will begin to visit foreign countries,” says Trent Innes, chief growth officer at SiteMinder.

The appearance of more potential travelers is inexorably linked to market recovery. Last year’s long-awaited return of China after three years of lockdown did not generate the hoped-for economic boost. Peking officials reacted with a battery of measures in response, and in 2024, the country’s GDP is expected to grow by a healthy 5% . The International Monetary Fund (IMF) calculated in April that there would be a worldwide growth of 3.2% this year. It appears that the world has reached cruising speed, given that this is the same percentage that global GDP rose by in 2023, and that is expected in 2025.

There’s no better tailwind for tourism than a robust economy. Even the European Union , which started the year flagging, saw a slight increase of 0.2% in household consumption in the first quarter. Analysts credit this European resilience, despite Germany’s seized engine and an IMF forecast for poorer growth than that of the United States, to strong job creation and an extraordinary pool of savings that was accumulated during the pandemic. Apparently, with help from public assistance and lower spending during lockdown, Europeans have yet to fully spend this nest egg. It therefore should come as no surprise that consumer optimism remains stable and has even improved as we head into summer, as a recent McKinsey survey pointed out.

Industry analysts have also pointed to psychological factors on the margins of this relative economic bonanza. They believe that the pandemic changed many people’s way of thinking and has given rise to a new kind of hedonism. “Different factors have led people to prefer short-term experiences over projects that might not be successful in the long term,” says Oscar Perelli, director of studies and research at Exceltur Tourism Alliance. No one knows if this preference will be around forever, but the World Travel and Tourism Council has stated that, since 2022, “even when things get difficult, people prefer to economize in other areas rather than cutting their travel budget.”

Governmental policies have also contributed to the boom. Some, to the point of regret. José Serrano, professor at Madrid’s Universidad Europea, illustrates this using the example of the Japanese government’s strategy to position the Asian country as a prime tourism destination . Among other things, these included subsidies for the development of tourist attractions and promoting rural tourism. Now, the region hosts so many millions of tourists every year that recently, the government took action to slow the wave of visitors.

Among the governmental strategies that have been implemented in the recovery of an industry that, years ago, went dry overnight, are changes in visa regulations that have provided another push. The most noteworthy case has been that of China, which, at the end of last year, announced a visa exemption for the citizens of five European countries and Malaysia. After this easing of requirements, trips to the country multiplied by 10 during Lunar New Year festivities (which run from February 10-17), according to the latest report from U.N. Tourism.

“There is no world region that does not want to increase its revenues, and that is making them dedicate more money to the promotion of tourism,” says José Manuel Lastra, vice president of the Spanish Confederation of Travel Agencies. “Morocco and Peru are seeing a significant increase, similar to Ireland and Austria,” he says. Pablo Díaz Luque, an educator at the Universitat Oberta de Catalunya, adds that social media platforms like Instagram and TikTok have made travel a necessity. “Sharing your tourism experience is now required, and its immediate consumption makes it all the more urgent. Before, it was a slower process, though you did share photo albums,” he says.

All this is adding up to what could be a record-breaking 2024 . The World Travel and Tourism Council estimates that 142 of the 185 countries it analyzed will see numbers of tourists and spending above pre-pandemic figures. Jobs linked to the industry will grow by 10% because, as Julia Simpson, the organization’s president, explains, economic growth and tourism are mutually compatible. “Traveling and tourism is not just about getting on a plane and going to new places. They are engines for job creation, economies, and cultural union around the world,” she says. Regardless of outcry over the overcrowding at some popular destinations, there seems to be no limit for the tourism industry in 2024.

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Why are people protesting against tourists in Barcelona?

Thousands of protesters have hit the streets of central Barcelona to denounce mass tourism and its effect on Spain's most visited city, the latest in a series of similar marches around the country.

The protesters stopped in front of hotels and restaurants to confront tourists, symbolically taping off some businesses and carrying signs reading "Barcelona is not for sale" and "Tourists go home".

Footage showed demonstrators shooting colourful water pistols at tourists eating outdoors at restaurants, with some soggy diners awkwardly shuffling to a different table.

"I have nothing against tourism, but here in Barcelona we are suffering from an excess of tourism that has made our city unliveable," said Jordi Guiu, a 70-year-old sociologist.

The group of protesters marching along a waterfront district in Barcelona on Saturday was some 2,800 strong, police said.

Here's what has led to the locals' frustrations bubbling over in the incredibly popular travel destination.

Housing costs in the heart of tensions

The key driver behind the protests is the rising cost of housing due to mass tourism, while the negative effects on local commerce and working conditions also play a role.

Housing costs in Barcelona have increased significantly, with rents up 68 per cent and the cost of buying a house up 38 per cent in the past decade , according to local authorities.

In the past year alone, rents in the city rose by 18 per cent, according to property website Idealista.

"Local shops are closing to make way for stores that do not serve the needs of neighbourhoods. People cannot afford their rents," Isa Miralles, a 35-year-old musician who lives in the Barceloneta district, told AFP.

Short-term holiday rentals under scrutiny

Barcelona's mayor Jaume Collboni announced last month that it was banning tourist apartment rentals by 2028 to combat the "negative effects of mass tourism".

The plan is to scrap the licenses of the 10,000-plus apartments currently approved as short-term rentals and put them back on the local housing market .

"We are confronting what we believe is Barcelona's largest problem," Mr Collboni told a city government event.

The announcement could lead to a legal battle and is opposed by Barcelona's tourist apartments association, APARTUR, which says it will feed the black market.

"Collboni is making a mistake that will lead to [higher] poverty and unemployment," APARTUR said in a statement.

Inside Airbnb, a website providing data about the impact of the vacation rentals platform on residential communities, says there are over 18,000 listings in Barcelona .

More than half of the listings were entire homes or apartments , as opposed to a host renting out a room or section of a property they live in, according to the website. About one in three were unlicensed .

Nearly three quarters of hosts in the city had multiple listings .

Restrictions on short-term rentals have been announced by local governments around the world as residents increasingly get priced out of popular travel destinations due to gentrification and owner preference for lucrative tourist rentals over long-term rentals for locals.

Tourism-reliant economy questioned

Spain has long been a popular holiday destination for its warm weather, rich history and sunny beaches.

But the country is struggling to balance promoting tourism, a key driver of its economy, and addressing citizens' concerns over housing availability and costs.

Spain was the second most-visited country in the world in 2023, behind France, according to World Tourism rankings by the United Nations World Tourism Organization.

It received 85 million foreign visitors in 2023, an increase of nearly 20 per cent from the previous year, according to the National Statistics Institute.

The most-visited region of Spain was Catalonia, with 18 million foreign visitors. Barcelona is the capital of Catalonia.

The coastal city alone, with its many internationally famous sites such as La Sagrada Familia, received more than 12 million tourists last year, according to local authorities.

The protesters in Barcelona are aware of the importance of tourism to the economy, but want to see that change.

A protester told Reuters one of the reasons she was attending the demonstration was to protest "against the economic model based on mass tourism."

"This model makes us poorer and more dependent," said Nuria Suarez.

Tensions on the rise around Spain

Barcelona isn't the only place in Spain where tourism is creating tension in the local community.

The Barcelona protests come after similar demonstrations in other tourist hotspots such as Malaga, Palma de Mallorca and the Canary Islands, some attended by tens of thousands of people.

Seasonal hospitality workers struggle to find accommodation, with many resorting to sleeping in caravans or even their cars.

The national government is taking notice, with Prime Minister Pedro Sanchez announcing last week that the government would create a registry of holiday rental properties in a bid to limit the number of listings .

Housing Minister Isabel Rodriguez said the registry would be ready by the end of 2025 at the earliest. When that happens, online platforms will have to provide data about hosts to verify if they are allowed to rent their homes.

The government is also looking to take steps to curb mid-term rentals ranging from one to 11 months, and may give neighbours in apartment blocks a say over whether an owner can list their property on platforms, the minister said.

But some don't feel the measures are enough.

"The rise of tourist rentals is a major problem and these measures are not serious," said Victor Palomo, leader of the Madrid Tenants' Union after meeting with the housing minister.

"It can't be that it's only neighbours that are in charge of regulating them," he said, calling for landlords to pay more taxes.

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Chicago tourism officials anticipate economic boost from DNC, other events this summer

By Tara Molina

Updated on: July 8, 2024 / 6:30 PM CDT / CBS Chicago

CHICAGO (CBS) -- The Democratic National Convention is a little more than a month away—on the heels of a number of big events in Chicago this year and this summer.

While 50,000 people from across the country and the world are expected to flock to Chicago in August for the DNC at the United Center , Chicago tourism officials said that is not the number that will make the biggest difference for the city.

Rich Gamble is the interim president and chief executive officer of Choose Chicago , the city's tourism agency. He noted that the city recently hosted the James Beard Awards and the Sundance Institute x cultural event—and of course, the NASCAR Street Race this past weekend.

The DNC arrives at the United Center from Aug. 19-22.

"Choose Chicago was involved in securing the bid for the DNC and partnering with the state and the city," said Gamble.

The DNC is expected to bring about 50,000 visitors to Chicago—the size of a typical convention in the city. 

"You'll see lots of red, white and blue," Gamble said. "You'll see lots of DNC information and logos."

Meanwhile, there are more conventions soon to come.

Less than three weeks after the DNC wraps up, the International Manufacturing and Technology show will be coming to McCormick Plage. The trade show will bring 100,000-plus—about twice as many as the DNC.

The International Manufacturing and Technology Show is held in Chicago every other year, and is the largest single convention on Choose Chicago's calendar for 2024.

But it is a specific chunk of the 50,000 DNC visitors who really set the convention apart from other events set in the city this year—such as concerts and festivals like Sueños and Lollapalooza.

"We'll have about 15,000 national and international media, so it is an opportunity to put Chicago on a global stage," Gamble said. "The international interest and the national interest and attention—that's what makes the DNC really special."

There are no solid economic impact projections yet, but there is a general idea of what to expect.

"Previous DNCs have had roughly $150 million economic impact on the whole city, so we're at least expecting that," Gamble said.

The United Center will serve as the headquarters for the DNC, but McCormick Place will host meetings throughout the convention. Hotels around the convention center are fully booked.

"What Chicago is all about—how we come together, we partner to put our best foot forward" is what tourism officials hope to showcase, said Gamble. 

• United Center
• Democratic National Convention
• McCormick Place

Tara Molina is a general assignment reporter for CBS2 Chicago.

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Wisconsin tourism is having a big moment. But what goes into calculating economic impact?

• The $25.6 billion number includes $15.7 in direct visitor spending, plus indirect effects like wages being spent in local economies.
• Not all counties benefit equally from tourism in Wisconsin, but all saw at least some increase from 2022 to 2023.
• It’s common for Wisconsin to set a tourism record every year, but the pandemic caused a dip that the state has largely recovered from.

It’s not a stretch to say Wisconsin tourism is having a moment.

Season 21 of “Top Chef,” which just finished airing, gave viewers a glimpse of Wisconsin’s traditions. Business boomed at Frank Lloyd Wright's Taliesin in Spring Green after it was featured in an episode.

In a few weeks, the Republican National Convention will blanket Milwaukee, bringing thousands of delegates, politicians, staff and media who will spend money on entertainment, hotels and restaurants . 

And don’t forget about next April, when an estimated 240,000 visitors will come to Green Bay and surrounding cities for the NFL Draft. An economic impact of $94 million is the early projection . 

That boom isn’t lost on Wisconsin politicians, especially Democratic Gov. Tony Evers, who has frequently hyped up a “record-breaking year” for tourism in posts on X, the site formerly known as Twitter. 

“Wisconsin saw another record-breaking year for tourism, with a historic $25 billion economic impact in 2023,” Evers posted June 11, 2024. “That blows 2022's record year out of the water.”

On June 22, 2024, Evers also called out “Wisconsin's record-breaking year for tourism” and credited outdoor recreation opportunities. 

PolitiFact Wisconsin was interested in these numbers, because there’s no doubt tourism will continue to be a hot topic in Wisconsin in the months ahead.

$25 billion is clearly a large number, but what goes into the formula to generate that economic impact? Is it spread throughout the state, or only in cities? And how does it compare to past years?

In short, is Evers right that it’s record-breaking?

Let’s take a look. 

Outside report calculates visitor spending and other variables to reach $25 billion number

The $25 billion number Evers is referring to comes from the Tourism Economics Report , which is available on the Wisconsin Department of Tourism website.

The report was created by Tourism Economics — a company of global advisory firm Oxford Economics — not the state itself. 

The methodology explains the firm used a model to trace the “flow of visitor-related expenditures through the state’s economy and their effects on employment, wages, and taxes.” 

Visitors were considered people who stayed overnight on a trip or traveled more than 50 miles to a destination. Multiple data sources were used, such as from surveys and the U.S. Bureau of Labor Statistics.

With that said, let’s take a closer look at how they calculated the $25 billion total impact. 

A large portion of that number — $15.7 billion — comes from direct visitor spending on things like lodging, food and beverage, retail, entertainment and transportation. 

Then there’s about $4.6 billion in what’s called supply-chain effects, such as needing to purchase more from food wholesalers and utilities. 

Finally, there’s $4.7 billion in “induced impacts” — which refers to wages that are generated directly or indirectly by visitor spending and spent in the local economy. 

That gives a picture of what goes into the $25 billion: It’s more than just the raw amount that visitors are spending in Wisconsin. 

Is that impact equally felt in the state?

The tourism department said all of Wisconsin’s 72 counties saw an increase in their total economic impact number from 2022 to 2023. A spreadsheet of county-level data confirms that. 

The top five counties with the highest economic impact, in millions, were Milwaukee, Dane, Sauk, Waukesha and Brown. 

Interestingly, popular tourism destination Door County ranked eighth at $620 million, far below Milwaukee’s $4.17 billion . 

The counties with the lowest economic impact from tourism were Menominee, Florence, Pepin, Forest and Lafayette. Those ranged from $6 million to $29 million in impacts. 

The counties that saw the highest growth in their total economic impact from 2022 to 2023 were Monroe, Menominee, and Green Lake. They saw increases from 10 to 11 percent each. 

Bottom line: All counties experienced growth in 2023, though some counties clearly benefit more from tourism than others.

Records often set each year, with COVID-19 pandemic as an exception 

Let’s go back to the part of Evers’ claim about 2023 being a “record-breaking year.” 

The tourism department has said the $25 billion last year broke a record, surpassing the previous record of $23.7 billion set in 2022. That increase is above the rate of inflation , too.

There’s a history of setting a new tourism record every year, at least under normal circumstances.

In 2017, the economic impact was about $20.6 billion, then $21.6 billion in 2018, the Oshkosh Northwestern reported . In 2019, the economic impact was $22.2 billion, according to a WPR story .

Then came the COVID-19 pandemic. In 2020, the economic impact dropped significantly to around $17.3 billion, then increased 21% to $20.9 billion in 2021, according to the department . 

Clearly, the tourism industry has been rebounding from COVID-19. The report says that “key indicators point to the normalization of Wisconsin’s visitor activity in 2023.” 

But some of those indicators haven’t quite caught up to pre-pandemic levels. Those include employment directly supported by visitor activity, and local and state tax revenues. 

Still, previous reports show that 2023 was a record-setting year for tourism. That economic impact number appears to steadily rise and set new records each year, with the onset of COVID-19 as an exception. 

And it certainly won’t be a surprise if Wisconsin sets another record in 2024, when the effects of “Top Chef” and the RNC are accounted for.

Our ruling 

Evers claimed Wisconsin had a “record-breaking year” for tourism in 2023.

The $25 billion total economic impact did set a record in 2023. Setting a new record each year is common, though COVID-19 caused a dip that the state has largely recovered from. 

To be sure, that impact isn’t felt equally in all communities in Wisconsin — some counties benefit far more from tourism than others — though all counties saw at least some increase in their totals from 2022 to 2023. 

And don't be surprised if the state Department of Tourism announces another huge increase in 2024. 

We rate the claim True.

Milwaukee Journal Sentinel, People are flocking to Frank Lloyd Wright's Taliesin after it was featured in 'Top Chef' , April 26, 2024.

Milwaukee Journal Sentinel, 'Most we ever spent in a city': What the largest delegation plans to do in Milwaukee for RNC , June 24, 2024.

Green Bay Press Gazette, Five reasons Green Bay hosting the 2025 NFL draft is 'a really big deal' for Wisconsin , May 24, 2023. 

X. Gov. Tony Evers , June 11, 2024.

X, Gov. Tony Evers , June 22, 2024.

Tourism Economics, The Wisconsin Visitor Industry - 2023 , May 2024.

Wisconsin Department of Tourism, County by County Spreadsheet , 2024.

Wisconsin Department of Tourism, Gov. Evers, Department of Tourism Announce Wisconsin Tourism Sees Another Record-Breaking Year , June 11, 2024.

Oshkosh Northwestern, Wisconsin tourism is flourishing; its economic impact reached $21.6 billion in 2018 , May 19, 2019. 

Wisconsin Public Radio, 2019 Was The Best Year In Recent History For Wisconsin Tourism, Then Coronavirus Hit , May 5, 2020. 

Wisconsin Department of Tourism, Wisconsin Tourism Surges in 2021 , June 8, 2022.

U.S. Inflation Calculator .

Mayor of Athens says tourism in Greece isn’t ‘viable’ anymore as each visitor only adds €0.40 to the economy

Summers in Athens are about historical sights like the Parthenon, colorful markets and plates of souvlakis. But lately, it’s gotten hard to cope with the number of people chasing those exact things. 

Authorities in the Greek capital of Athens have lamented the city’s tipping into overtourism territory, making crowds unmanageable . To control that, the city capped the number of tourists who could visit the Acropolis to 20,000 last year, as tourists flocked to Greece beyond just the summertime. 

Tourism is a double-edged sword in Greece. The number of visitors has exploded beyond control, growing by 120% between 2019 and 2023. But since Greece derives 25-30% of its GDP from tourist activities—with that number soaring to 90% on the island of Santorini—cracking down on it isn’t easy.

Still, the headache of excessive visitors and its impact on local communities and the city itself has made tourism in its current form isn’t sustainable, Athens’s Mayor Harris Doukas said.         

“Each visitor brings €0.40 to the city, and we haven’t seen this money yet,” Doukas told Euronews . “We need to find a way to make tourism viable.”

Last year, a whopping 33 million tourists visited Greece—over thrice the country’s population. More tourism means a greater economic boost by propping up local business activities. But they’ve resulted in a disproportionate strain on infrastructure, housing and environmental resources. These are particularly pressing as Greece grapples with the aftermath of wildfires in recent years. 

“It turns out that the pressures exerted by tourism on the environment are linked to the change of land uses (due to the creation of new infrastructure and other facilities for tourist use), and specifically with the expansion of the urban environment at the expense of the natural,” a government report on sustainable tourism found as part of a broader effort to change Greece’s approach towards tourism.  

Earlier this year, Greece introduced a “ climate crisis resilience tax ” that aims to raise funds that can help it address natural disasters by charging tourists through their hotel bills.    

Managing overtourism in a delicate yet firm way

Given its relationship with the tourism and hospitality sectors, Greece has tried to manage its visitors with a raft of measures, including extending the vacation season to a longer period and fining beach-bound tourists who take up too much space with their sunbeds and umbrellas. 

“Our goal is to protect both the environment and the right of citizens to access the beach freely, and to preserve our tourism product as well as healthy entrepreneurship,” Economy Minister Kostis Hatzidakis said in a statement, according to Agence France-Presse.

Travel demand was nearly zilch three years ago at the pandemic’s peak. But it has since come back roaring—and several other European cities are also facing the heat of it. Italy and the Netherlands are grappling with a phenomenon similar to Greece’s.

In response to the threat of overtourism, Amsterdam has curbed the construction of new hotels and plans to limit cruise ship dockings in its harbor , while Venice has introduced an entry fee for its visitors as of this summer. 

With visitor numbers steadily rising, countries now face a delicate balance between promoting and limiting tourism, especially where it’s a crucial piece of the economy.

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