The International Monetary Fund's staff report in the concluding statement of the 2023 Article IV Mission reveals that San Marino has experienced economic prosperity, despite the weakening European economy as a whole. The manufacturing and tourism sectors in San Marino have even surpassed pre-COVID levels.
According to the IMF staff, "San Marino’s strong economic performance continues amid external shocks and a weakening European economy. Activity has been supported by a competitive manufacturing sector and booming tourism that has exceeded pre-COVID levels. However, weakening external demand and tighter international financial conditions will affect growth going forward."
San Marino's economic success can be attributed to its competitive manufacturing sector and thriving tourism industry. The country's manufacturing sector has been able to maintain its competitiveness, contributing to the overall economic growth. Additionally, the tourism sector has experienced a significant boom, surpassing the levels seen before the COVID-19 pandemic.
Despite the positive outlook, the IMF staff cautions that San Marino's economic growth may face challenges due to weakening external demand and tighter international financial conditions. These factors could impact the country's future growth trajectory.
San Marino's economic recovery can be traced back to 2014 when the nonfinancial sector began its recovery process. This recovery was supported by factors such as cost-competitiveness in labor, strong balance sheets, and access to Italian banks. Even during the COVID-19 pandemic, San Marino's exporting sector remained strong and contributed to the country's resilience during the crisis.
The growth of the San Marino economy has remained steady despite the external shock to the European economy. The country's tight labor market has led to full employment, and access to international markets has increased policy buffers. The manufacturing and tourism sectors have benefited from external demand, leading to booming employment levels.
However, it is important to note that this economic boom may not be sustained indefinitely. Factors such as increasing inflation and heightened global uncertainty could weigh on the economic trends in San Marino.
In conclusion, San Marino has experienced economic prosperity, with its manufacturing and tourism sectors surpassing pre-COVID levels. Despite external challenges, the country's economy has remained strong. However, future growth may be impacted by weakening external demand and tighter financial conditions.