Faroe Islands: Economy#

The Faroese economy is dependent on fishing, which makes the economy vulnerable to price fluctuations. The sector normally accounts for about 95% of exports and nearly half of GDP. In early 2008 the Faroese economy began to slow as a result of smaller catches and historically high oil prices. The slowdown in the Faroese economy followed a strong performance since the mid-1990s with annual growth rates averaging close to 6%, mostly a result of increased fish landings and salmon farming, and high export prices. Unemployment reached its lowest level in June 2008 at 1.1% but gradually increased to about 5.5% in 2012. The Faroese Home Rule Government produced increasing budget surpluses in that period, which helped to reduce the large public debt, most of it to Denmark. However, total dependence on fishing and salmon farming make the Faroese economy vulnerable to fluctuations in world demand. Initial discoveries of oil in the Faroese area give hope for eventual oil production, which may provide a foundation for a more diversified economy and less dependence on Danish economic assistance. Aided by an annual subsidy from Denmark amounting to about 3% of Faroese GDP, the Faroese have a standard of living almost equal to that of Denmark and Greenland. The Faroese Government ran relatively large deficits from 2008 to 2010 and budget deficits are forecast for several years ahead. At year-end 2010 gross external debt had reached approximately US$900 million.

Economic Facts#

GDP (purchasing power parity)$1.471 billion (2010 est.)
$1.389 billion (2008 est.)
GDP - real growth rate2.9% (2010 est.)
0.5% (2008 est.)
GDP - per capita (PPP)$30,500 (2008 est.)
GDP - composition, by sector of originagriculture: 16%
industry: 29%
services: 55% (2007 est.)
Population below poverty lineNA%
Household income or consumption by percentage sharelowest 10%: NA%
highest 10%: NA%
Labor force - by occupationagriculture: 10.7%
industry: 18.9%
services: 70.3% (November 2010)
Exports - commoditiesfish and fish products 94%, stamps, ships
Exports - partnersDenmark 23.4%, UK 21%, Nigeria 13.4%, US 8.9%, Netherlands 8.4%, Russia 7%, China 4.4% (2012)
Agriculture - productsmilk, potatoes, vegetables; sheep; salmon, other fish
Budgetrevenues: $1.025 billion
expenditures: $1.301 billion
note: Denmark supplies the Faroe Islands with almost one-third of their public funds (2010 est.)
Imports - commoditiesgoods for household consumption 24%, machinery and transport equipment 23.5%, fuels 21.4%, raw materials and semi-manufactures, salt
Imports - partnersDenmark 42%, Norway 32%, Germany 8.7%, Iceland 5.3% (2012)
Exchange ratesDanish kroner (DKK) per US dollar -
5.695 (2011)
5.6241 (2011 est.)
5.6241 (2010 est.)
5.361 (2009)
5.0236 (2008)
Exports$824 million (2010)
$767 million (2009)
Debt - external$888.8 million (2010)
$68.1 million (2006)
Fiscal yearcalendar year
Imports$776 million (2010)
$786 million (2009)
Industrial production growth rate3.4% (2009 est.)
Industriesfishing, fish processing, small ship repair and refurbishment, handicrafts
Inflation rate (consumer prices)2.3% (2011)
0.4% (2010)
Labor force34,710 (November 2010)
Unemployment rate6.8% (2011)
5.7% (2010)
GDP (official exchange rate)$2.32 billion (2010 est.)
Taxes and other revenues44.2% of GDP (2010 est.)
Budget surplus (+) or deficit (-)-11.9% of GDP (2010 est.)