Recently, Fitch Ratings, the credit rating agency, released its latest evaluation on Andorra's economy, again maintaining its A- rating with a stable outlook. This outcome reflects prudent fiscal management and strong mid-term economic projections for this small yet thriving country.
May 31, 2024
The analysis performed by Fitch reveals several key points that underline the financial strength of Andorra:
A fiscal surplus of 2.4% of GDP at the end of the year 2023.
It is expected that this surplus will remain around 1% for both 2024 and 2025.
Debt in relation to GDP marked 36.5% in 2023, with projections of a gradual decrease to reach 31.6% by the end of 2026.
Real GDP growth reported at 1.4% in 2023, with expectations of an increase to 1.5% for 2024 and a slight reduction to 1.4% in 2025.
The results obtained show the fiscal management skills of the Andorran government, maintaining a proper balance between public spending and generated revenues. A conservative strategy that has allowed not only to maintain but also to enhance the country's credit rating against international standards.
Fiscal balance is crucial for investor confidence and facilitates the planning of public policies in the long term without compromising the financial stability of the country.
A stable credit rating has direct implications on the economic environment of Andorra, offering greater security for investors and both national and international businesses. This is particularly relevant given the size and openness of the Andorran economy, which significantly depends on external economic factors.
Businesses can benefit from a more predictable environment to make long-term plans.
Investors have additional assurances about the economic health of the country and less risk in their financial placements.
Looking towards the future, Andorra shows a promising outlook. Estimates of continued, although moderate, growth along with fiscal management that continues to show a surplus, put the small Pyrenean country in an enviable economic position compared to other economies of a similar scale.
These elements are essential not only to maintain the current rating but potentially to improve it, provided that current policies are maintained and the international context remains stable.
In conclusion, the persistent A- rating for Andorra by Fitch Ratings reflects an efficient public administration, a steadily growing economy, and exemplary fiscal management. As long as Andorra continues on this path, not only will the confidence in the country's economy be maintained, but the foundations for a sustainable and prosperous future will be further strengthened.
