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Economy of the Faroe Islands

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Economy of Faroe Islands
Vestaravag torshavn, faroe islands, feb 2005.jpg
Tórshavn is the capital and largest town of the Faroe Islands
CurrencyFaroese króna (pegged with Danish krone, (DKK))
calendar year
Trade organisations
none
Statistics
GDP$1.471 billion (2013 est.)[1]
GDP rank166th (nominal) / 179th (PPP)
GDP growth
7.5% (2013 est.)
GDP per capita
$45,709 (2010 est.)
GDP by sector
agriculture: 16%, industry: 29%, services: 55% (2007)
2.3% (2011)
Population below poverty line
no data
Labour force
34,710 (March 2010)
Labour force by occupation
agriculture: 10.7%, industry: 18.9%, services: 70.3% (2010)
Unemployment5.5% (May 2012)[2]
Main industries
fishing, fish processing, fish farming, small ship repair and refurbishment, handicrafts
External
Exports$824 million f.o.b. (2010 est.)
Export goods
fish and fish products 94%, stamps, ships
Main export partners
 Russia 23.8%
 United States 11.2%
 United Kingdom 10.6%
 Denmark 7.7%
 China 7.1%
 Germany 6.5%
 Norway 5.7% (2016)[3]
Imports$776 million c.i.f. (2010 est.)
Import goods
consumer goods 24%, machinery and transport equipment 23.5%, fuels 21.4%, raw materials and semi-manufactures, fish, salt
Main import partners
 Denmark 37.4%
 Germany 13.3%
 Norway 9.3%
 China 5.6%
 Sweden 4.3%
 Iceland 3.8% (2016)[4]
Public finances
$888.8 million (2010)
Revenues$1.22 billion (2010)
Expenses$1.301 billion (2010)
Economic aidrecipient: $100 million (annual subsidy from Denmark) (2007)
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

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.[5]

High dependence on fishing means the Faroe Islands' economy remains extremely vulnerable. The Faroese hope to broaden their economic base by building new fish-processing plants. Petroleum found close to the Faroese area gives hope for deposits in the immediate area, which may lay the basis to sustained economic prosperity. Also important are the annual subsidy from Denmark, which amounts to about 3% of the GDP.[6]

The Faroes have one of the lowest unemployment rates in Europe, 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.

History[edit]

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 come back in the last few years, with unemployment down to 5% in mid-1998, and holding below 3% since 2006, one of the lowest rates in Europe.

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.

Trade[edit]

In 2014 the Faroe Islands had a trade surplus of 401 million DKK,[7] a figure that rose to 1.43 billion DKK in 2016.[8] As of 2016, the Faroe Islands mainly imported goods from Denmark (2,467 million DKK), Germany (877 million DKK), and Norway (610 DKK).[4] 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).[3] European Union countries constituted 72.9% of total Faroese imports, while the exports of the Faroes Islands were more equally distributed between European Union (44.4%) and non-European Union countries (55.6%).[8] The vast majority of Faroese exports, almost 95%, consists of fishery products.[9] Russian countersanctions on food imports from Norway and the European Union, saw the Faroe Islands increase its fresh salmon exports to Russia.[10][11]

Imports and exports in 2014; values in million Danish krone (DKK)[8][4][3]
Rank Imports Rank Exports
Origin Value Destination Value
1  Denmark 2,467 DKK 1  Russia 1,907 DKK
2  Germany 897 DKK 2  United States 898 DKK
3  Norway 610 DKK 3  United Kingdom 851 DKK
4  China 371 DKK 4  Denmark 697 DKK
5  Sweden 282 DKK 5  China 569 DKK
6  Iceland 248 DKK 6  Germany 521 DKK
7  Italy 186 DKK 7  Norway 460 DKK
8  United Kingdom 169 DKK 8  France 369 DKK
9  France 148 DKK 9  Netherlands 284 DKK
10  Netherlands 143 DKK 10  Poland 251 DKK
 European Union 4,807 DKK  European Union 3,561 DKK
Non-EU countries 1,785 DKK Non-EU countries 4,461 DKK
Total 6,592 DKK Total 8,022 DKK

Energy[edit]

In 2014 217,547 tonnes of oil products were consumed in the Faroe Islands.[12] 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.[12]

The islands have 6 hydroelectric plants,[13] 4 diesel plants[14] and several wind power plants with a capacity factor above 40%.[15] In 2014, a 12MW wind farm for DKK 180 million[16] 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.[15] A 2.3MW 700 kWh lithium-ion battery[17] became operational in 2016.[18] Planners also consider converting the existing hydropower[19] to pumped-storage hydroelectricity.[16] Tidal power[20] and Thermal energy storage solutions are also considered.[21] The islands have a goal of 100% green electricity production by 2030.[16][22]

External images
Current production, pie diagram
Current production, numbers

In 2014 and 2017[23] 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.[24]

  • 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 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.[25]

Other[edit]

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[edit]

  • www.FaroeseSeafood.com - Information site on fisheries and aquaculture in the Faroe Islands
  • Apostle, Richard A. The Restructuration of the Faroese Economy The Significance of the Inner Periphery. Frederiksberg, Denmark: Samfundslitteratur, 2002. ISBN 87-593-0891-5
  • Elkjær-Hansen, Niels. The Faroe Islands Scenery, Culture, and Economy. Copenhagen: Royal Danish Ministry of Foreign Affairs, 1959.
  • Hagstova.fo

References[edit]

  1. ^ Hagstova.fo (Faroese Statistics)
  2. ^ Official Faroese Statistics (Faroese) Archived 2013-12-10 at the Wayback Machine
  3. ^ a b c "Exports by country of final destination (1988-2016)". Statistics Faroe Islands. Retrieved 5 November 2015.
  4. ^ a b c "Import by BEC-groups, country of origin and months (1988-2017)". Statistics Faroe Islands. Retrieved 5 November 2017.
  5. ^ "Gross domestic product 2014" (PDF). World Bank. 18 September 2015. Retrieved 12 October 2015.
  6. ^ Information about the economy of the Faroe Islands
  7. ^ "Faroe Islands in Figures 2015" (PDF). Statistics Faroe Islands. Archived from the original (PDF) on 4 March 2016. Retrieved 5 December 2015.
  8. ^ a b c "Faroe Islands in Figures 2017" (PDF). Statistics Faroe Islands. Archived from the original (PDF) on 5 February 2018. Retrieved 5 November 2017.
  9. ^ "Trade and Industry". VisitFaroeIslands.com. Archived from the original on 8 December 2015. Retrieved 5 December 2015.
  10. ^ Pettersen, Trude (September 3, 2015). "Faroe Islands cashing in on Russian sanctions". Barents Observer. Retrieved 5 December 2015.
  11. ^ 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.
  12. ^ a b "Consumption of oil in tonnes by consumer groups". Statistics Faroe Islands. Retrieved 6 December 2015.
  13. ^ Hydro electric power
  14. ^ Thermal Power
  15. ^ a b Terji Nielsen. Wind energy in the Faroe Islands Archived 2015-12-08 at the Wayback Machine page 19-21. SEV, 2015
  16. ^ a b c Green Progress
  17. ^ "Faroe Islands to get Europe's first wind-connected battery storage system". Renew Economy.
  18. ^ "Lithium-ion batteries can help to safeguard the grid". 8 November 2016. Retrieved 1 March 2017.
  19. ^ Bárður A. Niclasen. Vedvarende energi Archived 2015-12-08 at the Wayback Machine 2015
  20. ^ Tidal Energy on the Horizon
  21. ^ Jannicke Nilsen (27 November 2015). "ENERGYNEST - THERMAL ENERGY STORAGE - TES". Teknisk Ukeblad.
  22. ^ "100by2030". SEV. Retrieved 1 March 2017.
  23. ^ http://www.sev.fo/Default.aspx?ID=193&Action=1&NewsId=3008&M=NewsV2&PID=392
  24. ^ "SEV - Framleiðsluroknskapur 2014 Production Accounts 2014" (PDF) (in Faroese and English). SEV. Retrieved 25 September 2015.
  25. ^ SEV recommends wind turbines for Suðuroy

External links[edit]