Norway: Economic growth rebounds in Q1
May 15, 2018
In the first quarter of 2018, the economy grew a seasonally-adjusted 0.6% from the previous quarter, contrasting the 0.3% contraction in the fourth quarter of last year and beating market expectations of 0.5% growth. The mainland economy, which excludes petroleum activities and related ocean transport, experienced broadly stable growth of 0.6% in the first quarter, ticking down slightly from the fourth quarter’s revised 0.7% expansion (previously reported: +0.6% quarter-on-quarter).
In year-on-year terms, the economy lost steam in Q1, as growth slowed to 0.3% from Q4’s revised 1.6% expansion (previously reported: +1.4% year-on-year). Taken separately, the mainland economy outperformed the overall economy in Q1, growing 0.9%. This was, however, much less than the mainland economy’s revised 2.8% expansion in Q4 (previously reported: +2.7% year-on-year).
Despite rising consumer confidence, household consumption was flat in Q1 compared to the previous quarter in seasonally-adjusted terms. This was a weaker result than Q4’s 0.9% expansion and is partly explained by low car purchases in January and February. On the other hand, government consumption growth accelerated slightly to 0.6% in Q1, up from 0.5% in the fourth quarter. Meanwhile, fixed investment suffered from lower investment in the petroleum and manufacturing sectors in Q1, resulting in a 5.1% total decrease. This represents a sharp contrast from Q4’s 1.2% expansion.
The external sector was the standout performer in Q1. Strong sales abroad of Norwegian ships, oil platforms and aircraft, coupled with healthy sales of traditional goods, led total exports to increase 0.4% quarter-on-quarter in seasonally-adjusted terms. This was a contrast to Q4’s 2.8% contraction. Fewer sales of Norwegian services abroad weighed on the headline growth result in Q1, however. Imports, meanwhile, swung from Q4’s 4.1% growth to a contraction of 1.3% in Q1. Consequently, the external sector contributed 0.6 percentage points to growth in the quarter, substantially improving from a detraction of 2.4 percentage points in Q4.
Author: Edward Gardner, Economist