GDP and main figures
08. Oct 2024
Real GDP increased by 2.5% in 2023
The Gross Domestic Product (GDP) is a measure of the size of a country’s economy over a given period. When the GPD is measured in fixed prices, it is possible to measure whether the volume of produced goods and services is growing or shrinking independent of price trends. Annual GDP changes in fixed prices are a measure of real economic growth.
Continued growth in the Faroese economy
GDP in fixed prices grew by 2.5% in 2023. The Faroese economy recovered well from the international downturn caused by the Covid-19 pandemic. Economic growth remained above 3% in both 2021 and 2022. The latest figure thus indicates a slower momentum in the economy.
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Stagnation in many European economies
We can compare economic growth in the Faroes to economic growth in other countries. The real GDP growth of 2.5% in 2023 was higher than in other European countries, except for Iceland, which registered a 5.0% growth. The EU average was 0.4% in 2023.
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Finland and Sweden saw a decline in their economy in 2023, while Norway registered 0.5% real GDP growth. Denmark had the same growth as the Faroe Islands, at 2.5%.
Highest contribution to growth in the primary sector
The table below shows the gross value added (GVA) across the industry sectors from 2011 to 2023. It shows the contribution that the various sectors have on the overall annual change in the real GVA growth. All three sectors contributed positively to the GVA growth in 2023.
Many industries in the primary sector performed well, contributing 1.6% of the total growth in GVA – more than half of the total GVA growth in 2023. The total catch of pelagic fish increased in 2023, while the aquaculture industry saw decreased catches.
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The tertiary sector contributed with 1.0% of the total growth in GVA in 2023, with the water transport industry contributing the most. The manufacturing industry saw a GVA growth of 0.5% in 2023, with the construction industry being the top contributor in this sector.
GDP in current prices approaching DKK 27 billion
2023 has been marked by high inflation, as is reflected in a GDP growth in current prices of 6.7%, or DKK 1.7 billion. GDP in current prices thus stands at DKK 26.9 billion, equivalent to DKK 496,000 per capita.
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About the national accounts
The national accounts are a general description of the national economy and an analytical description of relations between societal sectors and Faroese transactions with the rest of the world. The GDP, a measure of the size and health of the economy over a given period, is one of the key indicators of the national accounts.
About the national accounts measured in fixed and current prices
In some contexts, it may be more important to measure volume changes in the national accounts than trend in current prices.
GDP and GVA in fixed prices and real economic growth
GDP and GVA can be calculated in fixed prices (chained values) to measure volume changes. Price changes are not taken into account using this method and therefore it is an inflation-adjusted measure. The GDP trend in fixed prices (chained values) is used as a measurement of the economic real growth.
Fixed prices (chained values) are a macroeconomic assessment of the volume of goods and services, where the weighting basis changes and is based on prices from the previous year. The previous year is chain-linked to the base year, but the reference year remains unchanged.
GDP in current prices
Nominal GDP is a macroeconomic assessment of the value of goods and services using current prices in its measure.
The contribution to the gross value added (GVA) shows the contribution from each industrial branch to the total GVA.
Minor changes to the national accounts
Minor revisions have been made to this year’s national accounts report for the 2020-2022 period in order to obtain more accurate figures. The effect of these revisions varies from one year to another, but the overall picture is unaffected.