Faroe Islands - Economy

Economy

Economic troubles caused by a collapse of the Faroese fishing industry in the early 1990s brought high unemployment rates of 10 to 15% in the mid 1990s. Unemployment decreased in the later 1990s, down to about 6% at the end of 1998. By June 2008 unemployment had declined to 1.1%, before rising to 3.4% in early 2009. Nevertheless, the almost total dependence on fishing and fish farming means that the economy remains vulnerable. Petroleum found close to the Faroese area gives hope for deposits in the immediate area, which may provide a basis for sustained economic prosperity.

11.7% of Faroe Islands' national budget comes as economic aid from Denmark, which is about the same as 18% of Faroe Islands' total expense budget.

Since 2000, new information technology and business projects have been fostered in the Faroe Islands to attract new investment. The introduction of Burger King in Tórshavn was widely publicized and a sign of the globalization of Faroese culture. It is not yet known whether these projects will succeed in broadening the islands' economic base. The islands have one of the lowest unemployment rates in Europe, but this should not necessarily be taken as a sign of a recovering economy, as many young students move to Denmark and other countries after leaving high school. This leaves a largely middle-aged and elderly population that may lack the skills and knowledge to fill newly developed positions on the Faroes. In 2008 the Faroes made a $52 million loan to Iceland, in light of that country's banking woes.

On 5 August 2009, two opposition parties introduced a bill in the Løgting to adopt the Euro as the national currency, pending a referendum.