Faroe Islands Economy - 2022

GEOGRAPHICAL NAMES 

Economic overview

The Faroese economy has experienced a period of significant growth since 2011, due to higher fish prices and increased salmon farming and catches in the pelagic fisheries. Fishing has been the main source of income for the Faroe Islands since the late 19th century, but dependence on fishing makes the economy vulnerable to price fluctuations. Nominal GDP, measured in current prices, grew 5.6% in 2015 and 6.8% in 2016. GDP growth was forecast at 6.2% in 2017, slowing to 0.5% in 2018, due to lower fisheries quotas, higher oil prices and fewer farmed salmon combined with lower salmon prices. The fisheries sector accounts for about 97% of exports, and half of GDP. Unemployment is low, estimated at 2.1% in early 2018. Aided by an annual subsidy from Denmark, which amounts to about 11% of Faroese GDP , Faroese have a standard of living equal to that of Denmark. The Faroe Islands have bilateral free trade agreements with the EU, Iceland, Norway, Switzerland, and Turkey.

 

For the first time in 8 years, the Faroe Islands managed to generate a public budget surplus in 2016, a trend which continued in 2017. The local government intends to use this to reduce public debt, which reached 38% of GDP in 2015. A fiscal sustainability analysis of the Faroese economy shows that a long-term tightening of fiscal policy of 5% of GDP is required for fiscal sustainability.

 

Increasing public infrastructure investments are likely to lead to continued growth in the short term, and the Faroese economy is becoming somewhat more diversified. Growing industries include financial services, petroleum-related businesses, shipping, maritime manufacturing services, civil aviation, IT, telecommunications, and tourism.

Real GDP (purchasing power parity)

$2.001 billion (2014 est.)

$1.89 billion (2013 est.)

$1.608 billion (2012 est.)

Real GDP growth rate

5.9% (2017 est.)

7.5% (2016 est.)

2.4% (2015 est.)

Real GDP per capita

$40,000 (2014 est.)

GDP (official exchange rate)

$2.765 billion (2014 est.)

Inflation rate (consumer prices)

-0.3% (2016)

-1.7% (2015)

GDP - composition, by sector of origin

agriculture: 18% (2013 est.)

industry: 39% (2013 est.)

services: 43% (2013 est.)

GDP - composition, by end use

household consumption: 52% (2013)

government consumption: 29.6% (2013)

investment in fixed capital: 18.4% (2013)

Agricultural products

potatoes, mutton, sheep skins, sheep offals, beef, sheep fat, cattle offals, cattle hides, cattle fat

Industries

fishing, fish processing, tourism, small ship repair and refurbishment, handicrafts

Industrial production growth rate

3.4% (2009 est.)

Labor force

27,540 (2017 est.)

Labor force - by occupation

agriculture: 15%

industry: 15%

services: 70% (December 2016 est.)

Unemployment rate

2.2% (2017 est.)

3.4% (2016 est.)

Population below poverty line

10% (2015 est.)

Gini Index coefficient - distribution of family income

22.7 (2013 est.)

21.6 (2011 est.)

Household income or consumption by percentage share

lowest 10%: NA

highest 10%: NA

Budget

revenues: 835.6 million (2014 est.)

expenditures: 883.8 million (2014)

note: Denmark supplies the Faroe Islands with almost one-third of its public funds

Budget surplus (+) or deficit (-)

-1.7% (of GDP) (2014 est.)

Public debt

35% of GDP (2014 est.)

Taxes and other revenues

30.2% (of GDP) (2014 est.)

Fiscal year

calendar year

Exports

$1.184 billion (2016 est.)

$1.019 billion (2015 est.)

Exports - partners

Russia 26.4%, UK 14.1%, Germany 8.4%, China 7.9%, Spain 6.8%, Denmark 6.2%, US 4.7%, Poland 4.4%, Norway 4.1% (2017)

Exports - commodities

fish and fish products (97%) (2017 est.)

Imports

$978.4 million (2016 est.)

$906.1 million (2015 est.)

Imports - partners

Denmark 33%, China 10.7%, Germany 7.6%, Poland 6.8%, Norway 6.7%, Ireland 5%, Chile 4.3% (2017)

Imports - commodities

goods for household consumption, machinery and transport equipment, fuels, raw materials and semi-manufactures, cars

Debt - external

$387.6 million (2012)

$274.5 million (2010)

Exchange rates

Danish kroner (DKK) per US dollar -

6.586 (2017 est.)

6.7269 (2016 est.)

6.7269 (2015 est.)

6.7236 (2014 est.)

5.6125 (2013 est.)

NOTE: The information regarding Faroe Islands on this page is re-published from the 2022 World Fact Book of the United States Central Intelligence Agency and other sources. No claims are made regarding the accuracy of Faroe Islands 2022 information contained here. All suggestions for corrections of any errors about Faroe Islands 2022 should be addressed to the CIA or the source cited on each page.