The Faroese economy - Labour market squeezed by very low unemployment

Analysis - November 2019 - No. 22

Authors Malthe-Thagaard, Sune; Nagy, Flora
Subject Nordic countries; Public finances and fiscal policy; Other economic analyses; Economic activity and employment; Faroese economy
Type Analysis
Year 2019
Published 13 November 2019
The Faroese economy has been in an upswing since 2014. Unemployment is now very low, and there is a risk that this may lead to overheating of the economy. The central government can increase the stability of the economy by pursuing countercyclical fiscal policy. The ageing of the population means that in the long term tax revenue will not be able to match government expenditure. This can be addressed by implementing reforms now.