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Current Trends in the Faroese Economy - Part 1

The Faroese economy is slowly recovering from the recession. Growth is mainly attributable to fisheries, with generally increasing prices. Fisheries were also the sector driving export growth, and the balance of trade showed a surplus in 2010. Unemployment has declined in recent months from its peak in February. The economic recovery has had a positive impact on the finances of central and local governments, reducing the deficits. However, the long-term fiscal sustainability is subject to uncertainty. Together with a structural problem, i.e. excess capacity in fisheries, this has contributed to the credit agency Moody's downgrading of the issuer rating of the Faroe Islands.