The economy of the Faroe Islands was the 166th largest in the world in 2014, having a nominal

gross domestic product Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is oft ...

(GDP) of $2.613 billion per annum. GDP increased from DKK 8 billion in 1999, to 21 billion in 2019. The vast majority of Faroese exports, around 90%, consists of fishery products.

History

After the severe economic troubles of the early 1990s, brought on by a drop in the vital

fish Fish are aquatic, craniate, gill-bearing animals that lack limbs with digits. Included in this definition are the living hagfish, lampreys, and cartilaginous and bony fish as well as various extinct related groups. Approximately 95% of ...

catch and poor management of the economy, the

Faroe Islands The Faroe Islands ( ), or simply the Faroes ( fo, Føroyar ; da, Færøerne ), are a North Atlantic island group and an autonomous territory of the Kingdom of Denmark. They are located north-northwest of Scotland, and about halfway bet ...

have recently recovered, with unemployment down to 5% in mid-1998, and holding below 3% since 2006, one of the lowest rates in

Europe Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a subcontinent of Eurasia and it is located entirel ...

Challenges and opportunities

Lisa Murkowski visits Faroe Islands - 2019 04

High dependence on

fishing Fishing is the activity of trying to catch fish. Fish are often caught as wildlife from the natural environment, but may also be caught from stocked bodies of water such as ponds, canals, park wetlands and reservoirs. Fishing techniques inclu ...

(including

salmon farming The aquaculture of salmonids is the farming and harvesting of salmonids under controlled conditions for both commercial and recreational purposes. Salmonids (particularly salmon and rainbow trout), along with carp, and tilapia are the three most ...

) means the

' 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.

Petroleum Petroleum, also known as crude oil, or simply oil, is a naturally occurring yellowish-black liquid mixture of mainly hydrocarbons, and is found in geological formations. The name ''petroleum'' covers both naturally occurring unprocessed crud ...

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 ) , song = ( en, "King Christian stood by the lofty mast") , song_type = National and royal anthem , image_map = EU-Denmark.svg , map_caption = , subdivision_type = Sovereign state , subdivision_name = Kingdom of Denmark , establish ...

, which amounted to about 3% of the GDP. The Faroes have one of the lowest unemployment rates in Europe (1% in 2019), 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 Information technology (IT) is the use of computers to create, process, store, retrieve, and exchange all kinds of Data (computing), data . and information. IT forms part of information and communications technology (ICT). An information te ...

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. The population was around 52,000 by 2019. General salaries increased from DKK 7 billion in 2013 to DKK 10 billion in 2019. In 2020, salmon exports were DKK 3.3 billion. Fishing industries occupied 1,441 people on land and 1,341 at sea.

Trade

In 2014 the

had a

trade surplus The balance of trade, commercial balance, or net exports (sometimes symbolized as NX), is the difference between the monetary value of a nation's exports and imports over a certain time period. Sometimes a distinction is made between a balance ...

of 401 million DKK, a figure that rose to 1.43 billion DKK in 2016. As of 2016, the Faroe Islands mainly imported goods from

(2,467 million DKK),

Germany Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...

(877 million DKK), and

Norway Norway, officially the Kingdom of Norway, is a Nordic country in Northern Europe, the mainland territory of which comprises the western and northernmost portion of the Scandinavian Peninsula. The remote Arctic island of Jan Mayen and the ...

(610 million DKK). The country's top export destinations were

Russia Russia (, , ), or the Russian Federation, is a transcontinental country spanning Eastern Europe and Northern Asia. It is the largest country in the world, with its internationally recognised territory covering , and encompassing one-eig ...

(1,907 million DKK), the United States (898 million DKK), the United Kingdom (851 million DKK), and Denmark (697 million DKK). 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%). The vast majority of Faroese exports, around 90%, consists of fishery products. Russian countersanctions on food imports from Norway and the European Union, saw the Faroe Islands increase its fresh salmon exports to Russia. The Faroe Islands has a

free trade agreement A free-trade agreement (FTA) or treaty is an agreement according to international law to form a free-trade area between the cooperating states. There are two types of trade agreements: bilateral and multilateral. Bilateral trade agreements occ ...

with Iceland since 2005.

Energy

Oil consumption peaked at over 300,000 tonnes in 2020, of which 30% was for fishing vessels. In 2014 217,547 tonnes of oil products were consumed in the Faroe Islands. 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. The islands have 6 hydroelectric plants, 4 diesel plants and several wind power plants with a

capacity factor The net capacity factor is the unitless ratio of actual electrical energy output over a given period of time to the theoretical maximum electrical energy output over that period. The theoretical maximum energy output of a given installation is def ...

above 40%.Terji Nielsen
Wind energy in the Faroe Islands
page 19-21. ''SEV'', 2015 In 2014, a 12MW

wind farm A wind farm or wind park, also called a wind power station or wind power plant, is a group of wind turbines in the same location used to produce electricity. Wind farms vary in size from a small number of turbines to several hundred wind turb ...

for DKK 180 million 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. A 2.3MW 700 kWh

lithium-ion battery A lithium-ion or Li-ion battery is a type of rechargeable battery which uses the reversible reduction of lithium ions to store energy. It is the predominant battery type used in portable consumer electronics and electric vehicles. It also s ...

became operational in 2016. Planners also consider converting the existing

hydropower Hydropower (from el, ὕδωρ, "water"), also known as water power, is the use of falling or fast-running water to produce electricity or to power machines. This is achieved by converting the gravitational potential or kinetic energy of a w ...

to pumped-storage hydroelectricity.

Tidal power Tidal power or tidal energy is harnessed by converting energy from tides into useful forms of power, mainly electricity using various methods. Although not yet widely used, tidal energy has the potential for future electricity generation. Ti ...

and

Thermal energy storage Thermal energy storage (TES) is achieved with widely different technologies. Depending on the specific technology, it allows excess thermal energy to be stored and used hours, days, months later, at scales ranging from the individual process, ...

solutions are also considered. The islands have a goal of 100% green electricity production by 2030. In 2014 and 2017 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 plant A thermal power station is a type of power station in which heat energy is converted to electrical energy. In a steam-generating cycle heat is used to boil water in a large pressure vessel to produce high-pressure steam, which drives a steam ...

s, which was 12.4% less than in 2013. *''fossil fuel:'' 49.2% *''hydro:'' 39.5% *''wind:'' 11.3% (2014) *''nuclear:'' 0% Total annual production: 305.4 GWh (2014) of which the production of thermal, hydropower and

wind power Wind power or wind energy is mostly the use of wind turbines to generate electricity. Wind power is a popular, sustainable, renewable energy source that has a much smaller impact on the environment than burning fossil fuels. Historically ...

was: *Thermal: 150,2 GWh *Hydropower: 120,7 GWh *Wind: 34,5 GWh 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.

Other

Agriculture - products:

milk Milk is a white liquid food produced by the mammary glands of mammals. It is the primary source of nutrition for young mammals (including breastfed human infants) before they are able to digest solid food. Immune factors and immune-modula ...

potato The potato is a starchy food, a tuber of the plant ''Solanum tuberosum'' and is a root vegetable native to the Americas. The plant is a perennial in the nightshade family Solanaceae. Wild potato species can be found from the southern Unit ...

es,

vegetable Vegetables are parts of plants that are consumed by humans or other animals as food. The original meaning is still commonly used and is applied to plants collectively to refer to all edible plant matter, including the flowers, fruits, stems, ...

sheep Sheep or domestic sheep (''Ovis aries'') are domesticated, ruminant mammals typically kept as livestock. Although the term ''sheep'' can apply to other species in the genus '' Ovis'', in everyday usage it almost always refers to domesticated ...

;

salmon Salmon () is the common name for several commercially important species of euryhaline ray-finned fish from the family Salmonidae, which are native to tributaries of the North Atlantic (genus ''Salmo'') and North Pacific (genus '' Oncorhy ...

, other

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)

References

External links

Faroese banknote series
Information about Faroese banknotes {{EU Dependent economies, state=collapsed Faroe +Faroe Islands