Norway’s economic recovery retains momentum
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.