Faroese economy grows despite high global uncertainty
The Faroese economy maintains growth, marked by a tight labor market and rising house prices, alongside increased corporate lending. However, the economy faces high global uncertainty due to slowing key industries and potential lower fishing quotas.
Tight labor market and rising asset values
The Faroese economy currently exhibits a robust and active profile, characterized by persistent pressure within its labor market.
This sustained demand for workforce contributes to a dynamic economic environment, reflecting high levels of employment and economic participation.
Concurrently, the housing market continues to experience upward trends, with house prices steadily rising, indicating strong domestic demand and potentially limited supply.
Furthermore, the overall high economic activity has translated into a notable expansion in lending growth across the financial sector.
A particularly strong increase has been observed in lending to corporate entities, suggesting business confidence and investment.
These factors collectively underscore a period of significant economic engagement and expansion within the Faroe Islands, building upon recent years of substantial growth.
Slowing growth and global uncertainty
After several years of strong growth, primarily driven by fishing and aquaculture, the Faroese economy has begun to slow.
Exports, which are highly sensitive to global conditions, face additional pressure from anticipated lower fishing quotas.
This creates significant uncertainty for the small, open, and relatively undiversified economy of the Faroe Islands.
In response to these challenges, Danmarks Nationalbank recommends that economic policy prioritize increasing the economy's resilience to external shocks and market shifts.