Norway: Economic activity records decrease for first time in six months in October
December 9, 2020
Economic output decreased 0.7% over the prior month in October in seasonally-adjusted terms, contrasting the 0.7% expansion in September and marking the first monthly contraction since April. Moreover, the economy grew 2.9% in the rolling quarter of August–October relative to the previous quarter (May–July), slowing markedly from the 4.6% growth clocked in July–September.
Mainland GDP—which excludes hydrocarbon extraction and related transport—increased 1.2% in October over the previous month, accelerating from the 0.7% rise in September. In the rolling quarter of August–October, the mainland economy expanded 3.7% from the previous rolling quarter, down from the 5.1% growth recorded in July–September.
The downturn in output in October was spearhead by the external sector: Export growth slowed to 1.5% from 1.9% in September, while imports jumped 1.6% from 0.2% in the month prior. Domestically, private consumption flatlined in October, having expanded 1.1% in September. Meanwhile, fixed investment slowed markedly (October: +0.6% mom; September: +5.2% mom) while government spending grew mildly (October: +0.9% mom; September: +0.1% mom).
October’s overall reading reflected a large downturn in oil-related activities, with strike action and maintenance shutdowns in some oil fields weighing on production. Looking forward, a substantial spike in Covid-19 infections in the country toward the end of October and into November brought about a tightening of restrictions, which are likely to drag on Mainland GDP in the final stretch of the year.
Looking ahead, Øystein Børsum and Marlene Skjellet Granerud, economists at Swedbank, commented:
“Our expectations [are] of a weak Q4 and Q1, due to restrictions and virus spread. [However], we continue to believe that the economy will rebound forcefully as spring sets in, mass vaccination is rolled out, and restrictions lifted.”
Author: Stephen Vogado, Economist