Norway: Economic activity set back in February
The Norwegian economy stumbled halfway through the first quarter; total GDP contracted 0.9% in seasonally adjusted month-on-month terms in February, deteriorating from January’s flat result. The economy grew 1.5% in the December–February rolling quarter relative to the previous rolling quarter (September–November), slowing from the 2.1% increase tallied in November–January.
Meanwhile, the mainland economy—which excludes hydrocarbons and related services—fell 0.2% in February (January: +0.6% s.a. mom). During the three months to February, mainland GDP rose 0.1%, ebbing from the 0.2% expansion posted in November–January.
The deterioration in total GDP was due to a weaker external sector. Domestically, the economy experienced a broad-based improvement. Private consumption posted a 0.2% increase in February, rebounding from January’s 0.6% fall. Fixed investment also returned to growth, rising 1.6% (January: -5.3% s.a. mom), while government spending growth accelerated to 0.5% (January: +0.2% s.a. mom).
Turning to the external sector, exports of goods and services fell by 2.9%, deteriorating from January’s 0.7% contraction. February’s result was the worst since September 2023. Meanwhile, imports of goods and services swung to a contraction (February: -0.6% s.a. mom; January: +0.9% s.a. mom).
Our Consensus is for total GDP to contract in seasonally adjusted quarter-on-quarter terms in Q1, largely reflecting a high base of comparison. Growth should then return in Q2 and accelerate in H2 2024. Overall, the economy will expand at a stronger pace this year than last, largely reflecting sturdier private consumption. Purchasing power will recover as the disinflation process continues and nominal wage growth outpaces inflation. Moreover, the kickoff of Norges Bank’s loosening cycle will lend further support later this year, once the impact of the rate cuts trickles though to the real economy.