Norway: Economic activity continues to gain momentum in the first quarter
May 22, 2012
In the first quarter, Norway mainland's GDP, which consists of all domestic production activity except for extraction of crude oil and natural gas (including related services), pipeline and ocean transport, rose a seasonally adjusted 1.1% over the previous quarter. The print came in above both the 0.8% expansion recorded in the fourth quarter (previously reported: +0.6% quarter-on-quarter) and market expectations that had GDP growing 0.9%. Compared to the same period last year, the mainland economy grew 4.5%, which is up from the 2.8% increase tallied in the previous quarter and marks in fact, the strongest print observed since June 2008. Meanwhile, total GDP expanded a seasonally adjusted 1.4% over the previous quarter, more than doubling the 0.6% increase recorded in the fourth quarter. On an annual basis, total GDP accelerated to 4.3% in the first quarter of 2012, well above the 1.5% rise recorded in the fourth quarter. According to the statistical institute, total GDP outpaced mainland GDP due to a healthy rebound in petroleum activities and ocean transport. The acceleration over the previous quarter was entirely due to an improving external sector, as domestic demand deteriorated noticeably (Q4 2011: +3.0% qoq; Q1 2012: -0.1% qoq). Private consumption grew 1.3% over the previous quarter (Q4 2011: +0.6% qoq), while government spending contracted 0.3% (Q4 2011: +0.4% qoq). In addition, gross fixed capital investment rose 0.6%, thereby mirroring the previous quarter's result. However, domestic demand was dragged down by a sharp downward shift in inventories, which shaved 0.9 percentage points off to GDP growth. Exports of goods and services, which benefited from higher oil prices, grew a seasonally adjusted 2.1% over the previous three-month period (Q4 2011: -3.3% qoq). On the other hand, imports contracted 2.1%, contrasting the 2.8% rise observed in the previous quarter. As a result, the external sector's net contribution to overall growth swung from minus 2.2 percentage points in the fourth quarter 2011 to plus 1.4 percentage points in the first.