Economy

Tourism, the mainstay of Andorra's tiny, well-to-do economy, accounts for roughly 80% of GDP. An estimated 9 million tourists visit annually, attracted by Andorra's duty-free status and by its summer and winter resorts. Andorra's comparative advantage has recently eroded as the economies of adjoining 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—only 2% of the land is arable—and most food has to be imported. Some tobacco is grown locally. The principal livestock activity is domestic sheep raising. Manufacturing output consists mainly of cigarettes, cigars, and furniture. Andorra's natural resources include hydroelectric power, mineral water, timber, iron ore, and lead.
Andorra is not a full member of the European Union, but enjoys a special relationship with it, such as being treated as an EU member for trade in manufactured goods (no tariffs) and as a non-EU member for agricultural products. Andorra lacks a currency of its own and uses that of its two surrounding nations. Prior to 1999 these were the French franc and the Spanish peseta, which have since been both replaced by the EU's single currency, the euro.