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Faroese economy

Current trends in the Faroese economy

The Faroe Islands are in a strong economic upswing these years. The main driver is the high rate of growth in fisheries, which is attributable to unusually favourable conditions in two of the three main branches of the industry, namely aquaculture and pelagic fishing, especially for mackerel. The government budget deficit has decreased. This is mainly attributable to budget effects of the strong cyclical position and growth in fisheries. Measures to improve the underlying fiscal position are still required. Demographic challenges are considerable, and The Economic Council for the Faroe Islands has estimated that a permanent fiscal improvement of 5 per cent of GDP will be required in order to stabilise government debt. Seen over a number of years, public consumption and public investment have amplified cyclical fluctuations. Planned public investment projects and other large-scale capital investment projects are expected to be considerable in the coming years and if the boom continues, this could entail a risk of bottlenecks, especially in the construction sector.