Norway: Economy firmly in recovery as Q2 GDP growth beats expectations
August 23, 2017
In Q2, the total economy expanded a seasonally-adjusted 1.1% from a quarter earlier, accelerating markedly from the tepid 0.2% growth recorded in Q1. The bright print, which beat market expectations of a more timid 0.6% expansion, was largely the result of a rebound in the country’s offshore oil and gas sector, which had contracted sharply in Q1. Meanwhile, mainland GDP, which excludes petroleum activities and related ocean transport, was stable at 0.7% in Q2 from a quarter earlier, following an upward revision to Q1’s result (previously reported: +0.6% quarter-on-quarter)—a back-to-back tie for the strongest print in three years.
In annual terms, however, the health of the economy appeared less certain. In Q2, total GDP growth fell to 0.2% from a year earlier (Q1: +2.5% year-on-year; previously reported, Q1: +2.6% yoy), while mainland GDP growth contracted 0.2% (Q1: +2.5% yoy; previously reported, Q1: +3.1% yoy).
Domestic demand was broadly in line with the moderately improved overall picture. Fixed investment, however, stood, outgrowing 3.2% from a quarter earlier (Q1: -0.6% qoq) following two quarters of contraction—a nearly five-year high that underscored the sharp climb in business confidence since the outset of the year. Meanwhile, private consumption rose 1.0% (Q1: +0.6% qoq), in line with falling unemployment, while government consumption decelerated to 0.4% (Q1: +0.8% qoq).
Encouragingly, the external sector experienced a turnaround in Q2. Exports grew 1.0% (Q1: -0.9% qoq) following a revised contraction in Q1 (previously reported: +0.9% qoq), largely due to higher shipments of refined products. Moreover, exports of traditional goods—which exclude crude oil, natural gas, natural gas condensates, ships and oil platforms—again grew robustly despite decelerating from a quarter earlier (Q2: +3.0% qoq; Q1: +6.0% qoq). Imports, on the other hand, contracted 0.4% (Q1: +4.3% qoq); imports of traditional goods fell even more sharply.