Norway: Economy contracts in the fourth quarter on lower oil and gas output
February 9, 2018
In the fourth quarter of 2017, the economy shrank a seasonally-adjusted 0.3% from the previous quarter, below both market analysts’ expectations of a 0.6% quarter-on-quarter expansion and the third quarter’s revised growth of 0.8% (previously reported: +0.7% quarter-on-quarter). The sudden downturn was due to deteriorated conditions in the offshore oil and gas sector: Output in the sector contracted 4.7% in Q4 compared to growth of 1.2% in Q3. On the other hand, the mainland economy, which excludes petroleum activities and related ocean transport, experienced broadly stable growth of 0.6% in the fourth quarter (Q3: +0.7% qoq; previously reported: +0.6% qoq).
In year-on-year terms, the economy lost steam in the fourth quarter, as growth slowed from a revised 3.4% in the third quarter (previously reported: +3.2% year-on-year) to 1.4%. Taken separately, however, the mainland economy performed well, growing 2.7% in Q4 compared to 2.0% in Q3.
In line with rising consumer confidence and employment, household consumption growth accelerated to 0.8%, up from Q3’s 0.6% expansion. Government consumption growth slowed, however, from Q3’s revised 0.7% expansion (previously reported: +0.5% qoq) to 0.5% in Q4. Fixed investment, which benefited from government investment in new combat aircraft, swung to an expansion of 1.6% in Q4, up from a revised contraction of 0.9% in Q3 (previously reported: -0.3% qoq).
The external sector was primarily behind the quarter-on-quarter downturn in Q4. As shipments of oil and gas plummeted, exports shrank 2.6%, deepening Q3’s revised 0.8% contraction in exports (previously reported: +0.9% qoq). Imports, on the other hand, expanded 3.2% in Q4, up from the revised contraction of 3.3% in Q3 (previously reported: -1.8% qoq). Consequently, the external sector detracted 2.0 percentage points from growth in the quarter, compared to a contribution of 0.8 percentage points in Q3.
Author: Edward Gardner, Economist