Norway: Economy contracts in Q2
August 20, 2015
In Q2, total GDP decreased a seasonally-adjusted 0.1% over the previous quarter, which contrasted the 0.1% expansion tallied in Q1. The reading was in line with market expectations. According to the statistical institute, Q1’s contraction reflected a significant deterioration in total investment, which offset the modest gains made in other sectors. Compared to the same quarter of the previous year, GDP accelerated from a 1.5% growth in Q1 to a 2.2% expansion in Q2.
Mainland GDP—consisting of all domestic production activity except for the extraction of crude oil and natural gas (including related services), pipeline and ocean transport—rose a seasonally-adjusted 0.2% in Q2. The reading came in below the revised 0.3% increase observed in Q1 (previously reported: +0.5% quarter-on-quarter). The expansion was also in line with market expectations. Compared to the same period of the previous year, the mainland economy grew 1.5% in Q2 (Q1: +1.3% yoy).
Total investment saw a sharp decrease over the previous quarter (Q1: 6.6% qoq; Q2: -2.8% qoq). The decrease reflected a deterioration in fixed investment as well as in the stock of inventories. Growth in private consumption fell to 0.5% (Q1: +1.0% qoq) while government spending increased over the previous quarter, expanding 0.5% (Q1: +0.1% qoq).
The external sector rebounded, as exports of goods and services contracted 0.1% over the previous quarter, which was an improvement over the 3.4% decrease tallied in Q1. Imports saw a steeper contraction, falling 1.3% in Q2 contrasting the 2.7% increase tallied in Q1. Consequently, the contribution from net exports to overall economic growth swung from minus 2.1 percentage points in Q1 to plus 0.4 percentage points in Q2.
Author: Robert Hill, Economist