Norway: Economy flatlines in Q2
The Norwegian economy lost steam in the second quarter of 2023 and flatlined in seasonally adjusted quarter-on-quarter terms, slowing from the 0.3% expansion posted in the first quarter. Similarly, the mainland economy—which excludes petroleum activities and related ocean transport—also flatlined in Q2 (Q1: +0.2% s.a. qoq), the weakest result since Q1 2022. The total economy’s quarterly slowdown was chiefly a result of weaker public spending growth and the external sector detracting from overall growth.
Domestically, government spending growth waned to 0.6% in Q2, down from the prior quarter’s 0.8% increase. More positively, fixed investment bounced back in quarter-on-quarter terms, growing 0.2% (Q1: -1.1% s.a. qoq). Similarly, private consumption rebounded in the second quarter, expanding 0.6% (Q1: -5.4%). The reading was largely due to a base effect; ahead of a tax increase in effect from 1 January 2023, car sales spiked in Q4 2022 and plunged 50% in Q1 2023. Meanwhile, employment rose 0.1% in Q2—the softest growth since end-2021, likely as Norges Bank’s tightening cycle cooled the economy.
Turning to the external sector, exports of goods and services growth inched up to 1.4% in Q2 from the previous quarter’s 1.3% rise. Meanwhile, imports of goods and services returned to growth and tallied a 1.7% expansion in Q2, swinging from Q1’s 0.3% decline. Q2’s expansion was the strongest in a year. As such, the external sector likely detracted from overall growth.
Meanwhile, on an annual basis, total economic activity growth receded by over a third from the prior quarter to 0.7% (Q1: +3.3% yoy). Similarly, mainland economic growth waned to 0.2% (Q1: +3.2% yoy). Both results were the slowest expansions since Q1 2021.