Norway: Economy records surprisingly strong expansion in Q3
November 20, 2015
In Q3, total GDP increased a seasonally-adjusted 1.8% over the previous quarter, which was a substantial improvement over the flat growth recorded in Q2 and the fastest growth in over three years. The reading drastically overshot market expectations of a 0.2% increase. According to the statistical institute, Q3’s bumper result reflected a significant improvement in the external sector’s contribution to growth, which offset the modest contraction in the domestic sector. Compared to the same quarter of the previous year, GDP accelerated from a 2.3% growth in Q2 to a 3.0% expansion in Q3.
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 Q3. The reading came in below the revised 0.3% increase observed in Q2 (previously reported: +0.2% quarter-on-quarter). The expansion also narrowly beat market expectations by 0.1 percentage points. Compared to the same period of the previous year, the mainland economy grew 1.3% in Q3 (Q2: +1.7% year-on-year).
Total investment contracted in Q3, although at a lesser rate than in Q2 (Q3: -3.3% qoq; Q2: -4.7% qoq). The decrease came despite a modest increase in fixed investment. Growth in private consumption fell to 0.2% in Q3 (Q2: +0.6% qoq) while government spending inched down over the previous quarter, expanding 0.6% (Q2: +0.7% qoq).
The external sector rebounded, as exports of goods and services grew 4.6% over the previous quarter, which was a stark improvement over the 0.3% expansion tallied in Q2. Imports saw a modest contraction, falling 2.3% in Q3, compared to the 2.8% decrease tallied in Q2. Consequently, the contribution from net exports to overall economic growth shot up from plus 0.9 percentage points to plus 2.5 percentage points.
Author: Robert Hill, Economist