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Economy of the Faroe Islands

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Economy of Faroe Islands
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$14.7 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 16.6%, UK 10.4%, USA 10.4%, Germany 10.1%, Denmark 6.6%, Nigeria 6.6%, China 6.1% (2014)[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 27.2%, Norway 19.7%, Germany 9.2%, China 4.9%, Sweden 4.8%, Poland 4.1%, Iceland 3.9% (2014)[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)
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 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 on the Faroes.

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 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

In 2014 the Faroe Islands had a trade surplus of 401 million DKK.[7] The Faroe Islands mainly imported from Denmark (1,625 million DKK), Norway (1,178 DKK), and Germany (548 million DKK).[4] The country's top export destinations were Russia (1,059 million DKK), the United Kingdom (660 million DKK), the United States (660 million DKK), and Germany (639 million DKK).[3] European Union countries contributed 62.7% of Faroese imports, while the exports of the Faroes Islands were almost equally distributed between European Union (49.8%) and non-European Union coutries (50.2%).[7] The vast majority of Faroese exports, almost 95%, consists of fishery products.[8] Russian countersanctions on food imports from Norway and the European Union, saw the Faroe Islands increase its fresh salmon exports to Russia.[9][10]

Imports and exports in 2014; values in million Danish krone (DKK)[7][4][3]
Rank Imports Rank Exports
Origin Value Destination Value
1  Denmark 1,625 DKK 1  Russia 1,059 DKK
2  Norway 1,178 DKK 2  United Kingdom 660 DKK
3  Germany 548 DKK 3  United States 660 DKK
4  China 290 DKK 4  Germany 639 DKK
5  Sweden 284 DKK 5  Denmark 423 DKK
6  Poland 246 DKK 6  Nigeria 423 DKK
7  Iceland 232 DKK 7  China 389 DKK
8  Netherlands 193 DKK 8  Netherlands 341 DKK
9  United Kingdom 192 DKK 9  France 289 DKK
10  France 144 DKK 10  Norway 233 DKK
–  European Union 3,745 DKK –  European Union 3,170 DKK
– Non-EU countries 2,226 DKK – Non-EU countries 3,192 DKK
– Total 5,971 DKK – Total 6,372 DKK

Energy

In 2014 217,547 tonnes of oil products were consumed in the Faroe Islands.[11] 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.[11]

The islands have 6 hydroelectric plants,[12] 4 diesel plants[13] and several wind power plants with a capacity factor above 40%.[14] In 2014, a 12MW wind farm for DKK 180 million[15] 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.[14] There are plans to connect a 2.3MW Lithium-ion battery,[16] and planners also consider converting the existing hydropower[17] to Pumped-storage hydroelectricity.[15] Tidal power[18] and Thermal energy storage solutions are also considered.[19] The islands have a goal of 100% green electricity production by 2030.[15]

External image
image icon Current production

In 2014 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.[20]

  • 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.[21]

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

  • 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

  1. ^ Hagstova.fo (Faroese Statistics)
  2. ^ Official Faroese Statistics (Faroese)
  3. ^ a b c "Exports by country of final destination". Statistics Faroe Islands. Retrieved 5 December 2015.
  4. ^ a b c "Imports by country of origin". Statistics Faroe Islands. Retrieved 5 December 2015.
  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. ^ a b c "Faroe Islands in Figures 2015" (PDF). Statistics Faroe Islands. Retrieved 5 December 2015.
  8. ^ "Trade and Industry". VisitFaroeIslands.com. Retrieved 5 December 2015.
  9. ^ Pettersen, Trude (September 3, 2015). "Faroe Islands cashing in on Russian sanctions". Barents Observer. Retrieved 5 December 2015.
  10. ^ Rutkowski, Lena (18 October 2015). "The Faroe Islands don't play by EU rules". The Murmur. Retrieved 5 December 2015.
  11. ^ a b "Consumption of oil in tonnes by consumer groups". Statistics Faroe Islands. Retrieved 6 December 2015.
  12. ^ Hydro electric power
  13. ^ Thermal Power
  14. ^ a b Terji Nielsen. Wind energy in the Faroe Islands page 19-21. SEV, 2015
  15. ^ a b c Green Progress
  16. ^ "Faroe Islands to get Europe's first wind-connected battery storage system". Renew Economy.
  17. ^ Bárður A. Niclasen. Vedvarende energi 2015
  18. ^ Tidal Energy on the Horizon
  19. ^ Jannicke Nilsen (27 November 2015). "ENERGYNEST - THERMAL ENERGY STORAGE - TES". Teknisk Ukeblad.
  20. ^ "SEV - Framleiðsluroknskapur 2014 Production Accounts 2014" (PDF) (in Faroese and English). SEV. Retrieved 25 September 2015.
  21. ^ SEV recommends wind turbines for Suðuroy
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