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Faroese economy

Current trends in the faroese economy

After several years of economic growth, driven by e.g. high prices for farmed salmon and good catches of mackerel and herring, the boom is gathering strength in 2016. The Economic Council for the Faroe Islands expects that growth in the next couple of years will be driven by both domestic and foreign demand, especially very large investments in the public sector and in publicly owned companies. The Faroese Ministry of Finance assesses output to be above the capacity of the economy. There is thus a risk that the economy will overheat, particularly in the construction sector. At the same time, there is a structural government budget deficit. Against this background Danmarks Nationalbank finds that fiscal policy should be tightened and long-term sustainability should be ensured. Moreover, central and local government budgets should be coordinated better so as to ensure coherent management of public finances.