Nor­way’s eco­nomic re­cov­ery re­tains mo­men­tum

The Gulf Today - Business - - VIEW POINT -

OSLO: Nor­way’s eco­nomic re­cov­ery stayed on track in the third quar­ter, helped by growth in tourism, re­tail sales and other ser­vice in­dus­tries, data showed on Tues­day.

The turn­around in 2017 fol­lows a two-year slump that be­gan as oil com­pa­nies cut in­vest­ment and laid off thou­sands of work­ers fol­low­ing a drop in the price of crude, Nor­way’s lead­ing ex­port.

Main­land gross do­mes­tic prod­uct, which ex­cludes oil and ship­ping, grew by 0.6 per cent be­tween July to Septem­ber from the pre­vi­ous quar­ter, com­pared with ex­pec­ta­tions for 0.5 per cent in a Reuters poll, Statis­tics Nor­way said.

Growth for the sec­ond quar­ter was re­vised down to 0.6 per cent from 0.7 per cent..

“This was an­other data point show­ing the Nor­we­gian econ­omy has put the oil cri­sis be­hind it, and is de­vel­op­ing well,” Nordea Mar­kets econ­o­mist Erik Bruce said.

“Growth is in line with the cen­tral bank’s ex­pec­ta­tions... and em­ploy­ment per­haps even a bit stronger.”

The Nor­we­gian crown ini­tially strength­ened against the euro fol­low­ing the data re­lease, but the rally quickly sub­sided and the lo­cal cur­rency traded flat at around 9.5257 by 0721 GMT.

Ear­lier on Tues­day, a quar­terly in­dex showed con­sumer con­fi­dence ris­ing to its high­est level in more than three years, con­tin­u­ing a re­bound from 24-year lows plumbed in early 2016.

“Over­all, Nor­we­gian house­holds re­main op­ti­mistic, prob­a­bly as a re­sult of de­clin­ing un­em­ploy­ment, ris­ing oil prices and ex­pec­ta­tions of con­tin­ued low in­ter­est rates,” DNB Mar­kets wrote.

The sur­vey, re­leased by fi­nan­cial lobby group Fi­nance Nor­way (FNO) and the Kan­tar TNS in­sti­tute, showed a mixed out­look for some re­gions how­ever, where a re­cent drop in house prices weighed on prospects for con­sumer spend­ing.

Mean­while in the Q2, the to­tal econ­omy ex­panded a sea­son­allyad­justed 1.1 per cent from a quar­ter ear­lier, ac­cel­er­at­ing markedly from the tepid 0.2 per cent growth recorded in Q1.

The bright print, which beat mar­ket ex­pec­ta­tions of a more timid 0.6 per cent ex­pan­sion, was largely the re­sult of a re­bound in the coun­try’s off­shore oil and gas sec­tor, which had con­tracted sharply in Q1. Mean­while, main­land GDP, which ex­cludes petroleum ac­tiv­i­ties and re­lated ocean trans­port, was sta­ble at 0.7 per cent in Q2 from a quar­ter ear­lier, fol­low­ing an up­ward re­vi­sion to Q1’s re­sult -a back-to-back tie for the strong­est print in three years.

In an­nual terms, how­ever, the health of the econ­omy ap­peared less cer­tain. In Q2, to­tal GDP growth fell to 0.2 per cent from a year ear­lier, while main­land GDP growth con­tracted 0.2 per cent.

Do­mes­tic de­mand was broadly in line with the moder­ately im­proved over­all pic­ture. Fixed in­vest­ment, how­ever, stood, out­grow­ing 3.2 per cent from a quar­ter ear­lier fol­low­ing two quar­ters of con­trac­tion—a nearly five-year high that un­der­scored the sharp climb in busi­ness con­fi­dence since the out­set of the year. Mean­while, pri­vate con­sump­tion rose 1.0 per cent, in line with fall­ing un­em­ploy­ment, while gov­ern­ment con­sump­tion de­cel­er­ated to 0.4 per cent.

En­cour­ag­ingly, the ex­ter­nal sec­tor ex­pe­ri­enced a turn­around in Q2. Ex­ports grew 1.0 per cent fol­low­ing a re­vised con­trac­tion in Q1, largely due to higher ship­ments of re­fined prod­ucts.

More­over, ex­ports of tra­di­tional goods—which ex­clude crude oil, nat­u­ral gas, nat­u­ral gas con­den­sates, ships and oil plat­forms— again grew ro­bustly de­spite de­cel­er­at­ing from a quar­ter ear­lier.

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