Norway: Economy grows at fastest rate in five months in May
July 7, 2021
Economic output increased 1.2% over the prior month in seasonally-adjusted terms in May, accelerating from the 0.4% expansion recorded in April and marking the best result since December 2020. Meanwhile, the economy declined 0.4% in the rolling quarter of March–May relative to the previous quarter (December–February), coming in above the 0.9% fall recorded in February–April.
Mainland GDP—which excludes hydrocarbon extraction and related transport—rose 1.8% over the previous month in May, up from the 0.4% increase recorded in April. In the rolling quarter of March–May, the mainland economy dropped 0.2% from the previous rolling quarter (December–February), and improving from the 0.9% contraction logged in February–April.
Domestically, May’s upturn was spearheaded by a pickup in private consumption, with growth accelerating to 4.9% in May over the prior month (April: +0.1% mom). Less positively, government spending expanded at a more moderate rate (May: +0.3% mom; April: +1.5% mom), while fixed investment swung back to a contraction in the same month (May: -0.8% mom; April: +1.9% mom). Meanwhile, the external sector likely capped overall GDP growth in May, with exports declining 2.1% over the prior month and contrasting April’s 5.1% expansion, while import growth accelerated in May to 1.8% (April: +0.7%).
The acceleration in growth was supported by the ongoing easing of restrictions in May, as daily Covid-19 infections continued to decrease as the vaccine rollout gained further traction. As such, economic activity is projected to have further firmed in June and in Q2 overall, although the rapid spread of the highly-contagious Delta variant poses a downside risk.
James Watson, senior economist at Oxford Economics, commented on the economy’s performance in Q2:
“Real-time mobility data show that households have responded rapidly to the first two phases of reopening, with retail mobility back to baseline in early June. A return to the high street is also reflected in firming sentiment data, with Q2 consumer confidence turning positive for the first time since the pandemic struck.”
Author: Marta Casanovas , Junior Economist