Economy of the Faroe Islands

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Economy of Faroe Islands
Eystaravag, Torshavn, faroe islands, feb 2005.jpg
Tórshavn is the capital and largest town of the Faroe Islands
Currency Faroese króna (pegged with Danish krone, (DKK))
calendar year
Trade organisations
none
Statistics
GDP US$2.83 billion (2017) [1]
GDP rank 166th (nominal) / 179th (PPP)
GDP growth
7.5% (2013 est.)
GDP per capita
$54,833 (2017) [1]
GDP by sector
agriculture: 16%, industry: 29%, services: 55% (2007)
1.3% (2019) Increase2.svg 0.1% [2]
Population below poverty line
10.1% (2018) Decrease2.svg 0.4% [3]
Labour force
31,667 (2019) [4]
Labour force by occupation
agriculture: 10.7%, industry: 18.9%, services: 70.3% (2010)
Unemployment1.7% in 2019 Decrease2.svg 0.4% [4]
Main industries
 fishing, fish processing, fish farming, small ship repair and refurbishment, handicrafts
External
ExportsDKK 9.77 billion (2019-20)
Increase2.svg 14% [5]
Export goods
fish and fish products 90%, stamps, ships
Main export partners
Flag of Russia.svg  Russia 23.8%
Flag of the United States.svg  United States 11.2%
Flag of the United Kingdom.svg  United Kingdom 10.6%
Flag of Denmark.svg  Denmark 7.7%
Flag of the People's Republic of China.svg  China 7.1%
Flag of Germany.svg  Germany 6.5%
Flag of Norway.svg  Norway 5.7% (2016) [6]
ImportsDKK 8.4 billion (2019-20)
Increase2.svg 9% [7]
Import goods
consumer goods 24%, machinery and transport equipment 23.5%, fuels 21.4%, raw materials and semi-manufactures, fish, salt
Main import partners
Flag of Denmark.svg  Denmark 37.4%
Flag of Germany.svg  Germany 13.3%
Flag of Norway.svg  Norway 9.3%
Flag of the People's Republic of China.svg  China 5.6%
Flag of Sweden.svg  Sweden 4.3%
Flag of Iceland.svg  Iceland 3.8% (2016) [8]
Public finances
$104.1 million (2018) [9]
Revenues$1.54 billion (2018) [9]
Expenses$1.43 billion (2018) [9]
Economic aid Block grant from the Danish state:
641.8 million kr./year (2016–2022) [10] [11]
(c.US$96 million)

The economy of the Faroe Islands was the 166th largest in the world in 2014, having a nominal gross domestic product (GDP) of $2.613 billion per annum. [12] GDP increased from DKK 8 billion in 1999, to 21 billion in 2019. [13] The vast majority of Faroese exports, around 90%, consists of fishery products. [14]

Contents

History

After the severe economic troubles of the early 1990s, brought on by a drop in the vital fish catch and poor management of the economy, the Faroe Islands have recently recovered, with unemployment down to 5% in mid-1998, and holding below 3% since 2006, one of the lowest rates in Europe.

Challenges and opportunities

Salmon farm Lisa Murkowski visits Faroe Islands - 2019 04.jpg
Salmon farm

Salaries by industry, 2019 [15]

  Service (64%)
  Fishing & farming (20%)
  Construction & manufacturing (16%)

High dependence on fishing (including salmon farming) means the Faroe Islands' economy remains vulnerable. The Faroese hope to broaden their economic base by building new fish-processing plants. The islands allow up to 25% foreign ownership of ocean industry decreasing gradually until 2032 when foreign ownership must end. [16] Petroleum found close to the Faroese area gives hope for deposits in the immediate area, which may lay the basis for sustained economic prosperity. Also important are the annual subsidy from Denmark, which amounted[ when? ] to about 3% of the GDP. [17]

The Faroes have one of the lowest unemployment rates in Europe (1% in 2019), [18] but this is not necessarily a sign of a recovering economy, as many young students move to Denmark and other countries once they are finished with high school. This leaves a largely middle-aged and elderly population that may lack the skills and knowledge to take IT positions in business and industry. Since 2000, new information technology and business projects have been fostered in the Faroe Islands to attract new investment. The result from these projects is not yet known but is hoped to bring a better market economy to the Faroe Islands.[ citation needed ] The population was around 52,000 by 2019. [19]

General salaries increased from DKK 7 billion in 2013 to DKK 10 billion in 2019. [15] In 2020, salmon exports were DKK 3.3 billion. Fishing industries occupied 1,441 people on land and 1,341 at sea. [20]

Trade

In 2014 the Faroe Islands had a trade surplus of 401 million DKK, [21] a figure that rose to 1.43 billion DKK in 2016. [22] As of 2016, the Faroe Islands mainly imported goods from Denmark (2,467 million DKK), Germany (877 million DKK), and Norway (610 million DKK). [8] The country's top export destinations were Russia (1,907 million DKK), the United States (898 million DKK), the United Kingdom (851 million DKK), and Denmark (697 million DKK). [6] European Union countries constituted 72.9% of total Faroese imports, while the exports of the Faroe Islands were more equally distributed between European Union (44.4%) and non-European Union countries (55.6%). [22] The vast majority of Faroese exports, around 90%, consists of fishery products. [14] [23] Russian countersanctions on food imports from Norway and the European Union, saw the Faroe Islands increase its fresh salmon exports to Russia. [24] [25] [26] The Faroe Islands has a free trade agreement with Iceland since 2005. [27]

Imports and exports in 2014; values in million Danish krone (DKK) [22] [8] [6]
RankImportsRankExports
OriginValueDestinationValue
1Flag of Denmark.svg  Denmark 2,467 DKK1Flag of Russia.svg  Russia 1,907 DKK
2Flag of Germany.svg  Germany 897 DKK2Flag of the United States (23px).png  United States 898 DKK
3Flag of Norway.svg  Norway 610 DKK3Flag of the United Kingdom.svg  United Kingdom 851 DKK
4Flag of the People's Republic of China.svg  China 371 DKK4Flag of Denmark.svg  Denmark 697 DKK
5Flag of Sweden.svg  Sweden 282 DKK5Flag of the People's Republic of China.svg  China 569 DKK
6Flag of Iceland.svg  Iceland 248 DKK6Flag of Germany.svg  Germany 521 DKK
7Flag of Italy.svg  Italy 186 DKK7Flag of Norway.svg  Norway 460 DKK
8Flag of the United Kingdom.svg  United Kingdom 169 DKK8Flag of France.svg  France 369 DKK
9Flag of France.svg  France 148 DKK9Flag of the Netherlands.svg  Netherlands 284 DKK
10Flag of the Netherlands.svg  Netherlands 143 DKK10Flag of Poland.svg  Poland 251 DKK
–Flag of Europe.svg  European Union 4,807 DKK–Flag of Europe.svg  European Union 3,561 DKK
–Non-EU countries1,785 DKK–Non-EU countries4,461 DKK
–Total6,592 DKK–Total8,022 DKK

Energy

Oil consumption peaked at over 300,000 tonnes in 2020, of which 30% was for fishing vessels. [28] In 2014 217,547 tonnes of oil products were consumed in the Faroe Islands. [29] Of this 31.58% was consumed by fishing vessels, 14.73% was used by SEV for electricity production, 23.23% was consumed in air, sea or land transport, 9.6% was used in the industry, and the rest was used in public or private buildings. [29]

The islands have 6 hydroelectric plants, [30] 4 diesel plants [31] and several wind power plants with a capacity factor above 40%. [32] In 2014, a 12MW wind farm for DKK 180 million [33] became operational near Torshavn and increased wind capacity from 6.6 to 18.6MW. It decreases oil consumption by 8,000 ton (approximately 4M€) per year. [32] A 2.3MW 700 kWh lithium-ion battery [34] became operational in 2016. [35] Planners also consider converting the existing hydropower [36] to pumped-storage hydroelectricity. [33] Tidal power [37] and Thermal energy storage solutions are also considered. [38] The islands have a goal of 100% green electricity production by 2030. [33] [39]

External images
Searchtool.svg Current production, pie diagram
Searchtool.svg Current production, numbers

In 2014 and 2017 [40] 50.8% of the electricity production of SEV in the Faroe Islands came from green energy like hydro and wind, while 49.2% was produced by the thermal power plants, which was 12.4% less than in 2013. [41]

Total annual production: 305.4 GWh (2014) of which the production of thermal, hydropower and wind power was:

The Faroe Islands have no electricity connections to other areas, and thus operate in island condition. Some islands are also not connected to the other islands, and must maintain their own electric system. [42]

Other

Agriculture - products: milk, potatoes, vegetables; sheep; salmon, other fish

Currency: 1 Danish krone (DKr) = 100 ører

Exchange rates: Danish kroner (DKr) per US$1 – 5.560 (2008), 7.336 (January 2000), 6.976 (1999), 6.701 (1998), 6.604 (1997), 5.799 (1996), 5.602 (1995)

Further reading

Related Research Articles

<span class="mw-page-title-main">Transport in the Faroe Islands</span> Internal transport system of the Faroe Islands

The Faroe Islands is served by an internal transport system based on roads, ferries, and helicopters. As of the 1970s, the majority of the population centres of the Faroe Islands have been joined to a single road network, connected by bridges and tunnels.

<span class="mw-page-title-main">Tórshavn</span> Capital of the Faroe Islands

Tórshavn, usually locally referred to as simply Havn, is the capital and largest city of the Faroe Islands. It is located in the southern part on the east coast of Streymoy. To the northwest of the city lies the 347-meter-high (1,138 ft) mountain Húsareyn, and to the southwest, the 350-meter-high (1,150 ft) Kirkjubøreyn. They are separated by the Sandá River. The city itself has a population of 14,065 (2023), and the greater urban area has a population of 23,194, including the suburbs of Hoyvík and Argir.

<span class="mw-page-title-main">Faroese króna</span> Currency of the Faroe Islands

The króna is the currency of the Faroe Islands. It is issued by Danmarks Nationalbank, the central bank of Denmark. It is not a separate currency, but is rather a local issue of banknotes denominated in the Danish krone, although Danish-issued coins are still used. Consequently, it does not have an ISO 4217 currency code and instead shares that of the Danish krone, DKK. This means that in the Faroe Islands, credit cards are charged in Danish kroner. The króna is subdivided into 100 oyru(r).

<span class="mw-page-title-main">Kringvarp Føroya</span> Public broadcaster in the Faroe Islands

Kringvarp Føroya is the national public broadcasting company of the Faroe Islands. It was founded on 1 January 2005 after a merger of the national radio and television networks Útvarp Føroya and Sjónvarp Føroya.

Atlantic Airways is the national airline of the Faroe Islands, operating domestic helicopter services and international passenger services as well as search and rescue responsibilities from its base at Vágar Airport, on the Faroese island of Vágar. Most of its pilots are members of the Faroese Pilot Association. Its 2021 revenue was 410.2mm DKK.

The Faroese mass media consists of several newspapers, radio stations, magazines, as well as a local TV station, Kringvarp Føroya.

<span class="mw-page-title-main">Cinema of the Faroe Islands</span> Filmmaking in the Faroe Islands

The Faroe Islands has a small population, and due to the high initial cost of filmmaking, the islands cinema history is modest. The first film director of the Faroe Islands was Katrin Ottarsdóttir. Her first film set in the Faroe Islands was Atlantic Rhapsody in 1989.

Uni Jógvanson Arge is a Faroese journalist, writer, musician, singer and a former international football striker.

<span class="mw-page-title-main">SEV (company)</span> Power producer and distributor on the Faroe Islands

SEV is a power producer and distributor on the Faroe Islands. The company name is derived from the names of islands Streymoy, Eysturoy and Vágar, which established the company on 1 October 1946. All municipalities in Vágar, all in Eysturoy except for Sjóvar municipality and all municipalities in Streymoy except for Tórshavn, Kvívík and Kollafjørður met at the first establishing meeting. Later all municipalities in the Faroe Islands joined SEV. In 2015 60% of the produced electricity of SEV came from green energy sources, 17,8% came from the windmills in Neshagi and Húsahagi, 42,3% came was hydropower.

<span class="mw-page-title-main">Eik Banki</span> Financial services group in the Faroe Islands

Eik Banki Føroya P/F is a financial services group in the Faroe Islands, which was previously one of the two major privately owned banking firms based in the country. Established in 1832, the group, which also operated in mainland Denmark, encompassed retail, corporate and investment banking activities as well as real estate brokerage. The company was nationalised by Denmark in October 2010 after becoming insolvent, with its Danish retail banking operations being sold later in the year to the regional bank Sparekassen Lolland.

Being part of the Kingdom of Denmark, the foreign relations of Faroe Islands are handled in cooperation with the Danish government and Government of Faroe Islands.

<span class="mw-page-title-main">Faroe Islands and the European Union</span> Bilateral relations

The Faroe Islands, a self-governing nation within the Kingdom of Denmark, is not part of the EU, as explicitly asserted by both Rome treaties.

<span class="mw-page-title-main">Faroese cuisine</span> Traditional food of the Faroe Islands

Important parts of Faroese cuisine are lamb and also fish owing to proximity to the sea. Traditional foods from the Faroe Islands include skerpikjøt, seafood, whale meat, blubber, garnatálg, Atlantic puffins, potatoes, and few fresh vegetables.

<span class="mw-page-title-main">Education in the Faroe Islands</span>

The levels of education in the Faroe Islands are primary, secondary and higher education. Most institutions are funded by the state; there are few private schools in the country. Education is compulsory for 9 years between the ages of 7 and 16.

<span class="mw-page-title-main">Eysturoyartunnilin</span> Undersea road tunnel under the Tangafjørður sound in the Faroe Islands

Eysturoyartunnilin is a large undersea road tunnel under the Tangafjørður sound in the Faroe Islands, connecting the island of Streymoy to the island of Eysturoy. It also crosses the southern part of Skálafjørður, and connects the towns of Runavík on the eastern side and Strendur on the western side of the fjord, and includes the world's first undersea roundabout in the middle of the network.

<span class="mw-page-title-main">Sandoyartunnilin</span> Undersea road tunnel in the Faroe Islands

Sandoyartunnilin is an undersea road tunnel in the Faroe Islands. It connects the main island of Streymoy with Sandoy to the south. The length of the tunnel is 10.8 kilometres (6.7 mi) and the estimated cost is 860 million DKK. The tunnel opened for traffic on 21 December 2023, after which the ferry Teistin ceased its route between Gamlarætt on Streymoy and Skopun on Sandoy. The tunnel crosses the Skopunarfjørður and runs from Gamlarætt to Traðardalur in central Sandoy, near the Inni í Dal stadium.

Energy in the Faroe Islands is produced primarily from imported fossil fuels, with further contributions from hydro and wind power. Oil products are the main energy source, mainly consumed by fishing vessels and sea transport. Electricity is produced by oil, hydropower and wind farms, mainly by SEV, which is owned by all the municipalities of the Faroe Islands. The Faroe Islands are not connected by power lines with continental Europe, and thus the archipelago cannot import or export electricity.

The COVID-19 pandemic was confirmed to have reached the Faroe Islands, an autonomous territory of Denmark, in March 2020. The confirmed infection rate was 1 case per 280 inhabitants, one of the highest rates in the world, but the archipelago also tested at a very high frequency, with the number of tests equaling c. 34 per cent of the population. As of 28 February 2022, there have been 34648 confirmed cases. Among these, 31 persons have died with COVID-19.

The Suðuroyartunnilin is a proposed submerged fixed-link in the Faroe Islands, linking the island of Suðuroy to Sandoy. As of 2023, all vehicles and cargo, and virtually all passenger traffic must use the ferry service.

References

  1. 1 2 "Main figures - Gross domestic product". Statistics Faroe Islands. 26 April 2019. Archived from the original on 12 November 2019. Retrieved 21 May 2020.
  2. ↑ "Changes in CPI, average annual inflation rate". Statistics Faroe Islands. Retrieved 21 May 2020.
  3. ↑ "Risk of poverty". Statistics Faroe Islands. Retrieved 21 May 2020.
  4. 1 2 "Labour force". Statistics Faroe Islands. Retrieved 21 May 2020.
  5. ↑ "Exports exceed DKK 9 billion". Statistics Faroe Islands. 17 April 2020. Retrieved 21 May 2020.
  6. 1 2 3 "Exports by country of final destination (1988-2016)". Statistics Faroe Islands . Retrieved 5 November 2015.
  7. ↑ "Total imports at DKK 8.4 billion". Statistics Faroe Islands. 17 April 2020. Retrieved 21 May 2020.
  8. 1 2 3 "Import by BEC-groups, country of origin and months (1988-2017)". Statistics Faroe Islands . Retrieved 5 November 2017.
  9. 1 2 3 "General government". Statistics Faroe Islands. 1 November 2019. Archived from the original on 12 November 2019. Retrieved 21 May 2020.
  10. ↑ "Forslag til finanslov for finansåret 2022" (PDF). Finansministeriet. 30 August 2021. p.  100 . Retrieved 22 December 2022.
  11. ↑ "Finanslov for finansåret 2022" (PDF). Finansministeriet. 7 February 2022. p.  92 . Retrieved 22 December 2022.
  12. ↑ "Gross domestic product 2014" (PDF). World Bank. 18 September 2015. Retrieved 12 October 2015.
  13. ↑ "GDP more than doubled from 1999 to 2019". Kringvarp Føroya (in Faroese). 23 February 2021.
  14. 1 2 "Economy of the Faroe Islands". Visit Faroe Islands. Retrieved 18 January 2020.
  15. 1 2 Djurhuus, Høgni (11 January 2020). "Salaries exceeded DKK 10 billion last year". Kringvarp Føroya (in Faroese).
  16. ↑ Hvidtfeldt, Jón Brian (23 December 2019). "Foreign ownership in fishery industry continues". Kringvarp Føroya (in Faroese).
  17. ↑ "Information about the economy of the Faroe Islands". 21 December 2022.
  18. ↑ Djurhuus, Høgni (13 January 2020). "Enough funds to cover 12 years of unemployment". Kringvarp Føroya (in Faroese).
  19. ↑ "Population now close to 52,000". Kringvarp Føroya (in Faroese).
  20. ↑ "Number of fishing industry jobs halved since 1985". Kringvarp Føroya. 23 April 2021.
  21. ↑ "Faroe Islands in Figures 2015" (PDF). Statistics Faroe Islands. Archived from the original (PDF) on 4 March 2016. Retrieved 5 December 2015.
  22. 1 2 3 "Faroe Islands in Figures 2017" (PDF). Statistics Faroe Islands. Archived from the original (PDF) on 5 February 2018. Retrieved 5 November 2017.
  23. ↑ "Trade and Industry". VisitFaroeIslands.com. Archived from the original on 8 December 2015. Retrieved 5 December 2015.
  24. ↑ Pettersen, Trude (September 3, 2015). "Faroe Islands cashing in on Russian sanctions". Barents Observer. Retrieved 5 December 2015.
  25. ↑ Rutkowski, Lena (18 October 2015). "The Faroe Islands don't play by EU rules". The Murmur. Archived from the original on 8 December 2015. Retrieved 5 December 2015.
  26. ↑ "Faroe/Russian fishery agreement renewed". Kringvarp Føroya (in Faroese). 10 December 2019.
  27. ↑ Johannessen, John (29 December 2019). "Faroe/Iceland free trade deal renewed". Kringvarp Føroya (in Faroese).
  28. ↑ "Oil consumption peaked last year". Kringvarp Føroya. 22 March 2021.
  29. 1 2 "Consumption of oil in tonnes by consumer groups". Statistics Faroe Islands . Retrieved 6 December 2015.
  30. ↑ "Hydro electric power".
  31. ↑ "Thermal Power".
  32. 1 2 Terji Nielsen. Wind energy in the Faroe Islands Archived 2015-12-08 at the Wayback Machine page 19-21. SEV, 2015
  33. 1 2 3 "Green Progress".
  34. ↑ "Faroe Islands to get Europe's first wind-connected battery storage system". Renew Economy. 15 April 2015.
  35. ↑ "Lithium-ion batteries can help to safeguard the grid". 8 November 2016. Retrieved 1 March 2017.
  36. ↑ Bárður A. Niclasen. Vedvarende energi Archived 2015-12-08 at the Wayback Machine 2015
  37. ↑ "Tidal Energy on the Horizon".
  38. ↑ Jannicke Nilsen (27 November 2015). "ENERGYNEST - THERMAL ENERGY STORAGE - TES". Teknisk Ukeblad . Archived from the original on 4 January 2023. Retrieved 30 November 2015.
  39. ↑ "100by2030". SEV . Retrieved 1 March 2017.
  40. ↑ "Forsíða".
  41. ↑ "SEV - Framleiðsluroknskapur 2014 Production Accounts 2014" (PDF) (in Faroese and English). SEV. Archived from the original (PDF) on 28 May 2016. Retrieved 25 September 2015.
  42. ↑ "SEV recommends wind turbines for Suðuroy".
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