Norway: Economic output returns to growth in May
July 8, 2020
Economic output grew 1.9% over the prior month in May in seasonally-adjusted terms, contrasting the 3.8% contraction in April and marking a rapid return to growth following two months of contracting output. Nevertheless, the economy shrank 7.1% in the rolling quarter of March–May relative to the previous quarter, which was markedly sharper than the 4.5% contraction in February–April.
Mainland GDP—which excludes hydrocarbon extraction and related transport—rose 2.4% in May over the previous month, after falling 4.6% in April. In the rolling quarter of March–May, the mainland economy dived 8.7% from the previous rolling quarter, notably worse than the 5.6% contraction recorded in February–April.
The rebound in output in May was spearhead by a robust return to growth in domestic demand: Private consumption grew 4.8% month-on-month (mom) after tumbling 6.0% in April, while fixed investment rose 3.7% in May after falling 1.6% in the prior month. Externally, exports fell a more moderate 0.4% in May, having slumped 5.9% in May, while imports also declined at a much softer pace than in the month prior (May: -0.3% mom; April: -8.2% mom).
The positive reading came on the back of the easing of containment measures at the end of April, greatly benefiting the domestic economy. However, the continued albeit mild contraction in exports and imports points to prolonged weakness in key trading partners, with both demand and activity taking time to recover from widespread lockdown measures. Furthermore, low oil and gas prices are an impediment to energy-sector investment this year, with uncertainty in future demand for fossil fuels further clouding the outlook.
Author: Stephen Vogado, Economist