Analyses focus on current issues of particular relevance to Danmarks Nationalbank’s objectives. The analyses may also contain Danmarks Nationalbank’s recommendations. They include our projections for the Danish economy and our assessment of financial stability. Analyses are targeted at people with a broad interest in economic and financial matters.
Demographic headwinds increase the need for fiscal adjustment in the Faroe Islands
The Faroese economy is booming, with high employment and widespread pressure on production capacity in large parts of the economy. Despite several good years, there have been no significant surpluses in public finances. The Faroese economy is also facing demographic changes that put pressure on long-term fiscal sustainability. The Faroese economy is relatively monolithic, which increases the need to use the upturns to increase resilience and prepare for the future. In the financial sector, banks are now better equipped than before to withstand a potential crisis.
Key messages
Danmarks Nationalbank is the central bank for the entire Danish Realm. We therefore continuously analyse the development in the Greenlandic and Faroese economies to live up to our purpose of ensuring stable prices and ensuring the best basis for assessing the possible emergence of socio-economic imbalances.
Main chart: Facts about the Faroe Islands
Source:
Hagstova Føroya and own calculations.