Norway: Economy shrinks in Q1
May 13, 2019
The economy shrank 0.1% in the first quarter of 2019 in seasonally-adjusted terms, contrasting the 0.6% growth in the fourth quarter of 2018. The mainland economy—which excludes petroleum activities and related ocean transport—expanded 0.3% in Q1, down from the revised 1.1% expansion in Q4 (previously reported: +0.9% quarter-on-quarter) and just shy of market analysts’ expectations of 0.4% growth. In annual terms, the economy grew 2.5% in Q1, up from the revised 1.9% increase in Q4 (previously reported: +1.7% year-on-year); the mainland economy, meanwhile, grew 3.7%, up from 2.6% (previously reported: +2.4% yoy).
In quarter-on-quarter terms, private consumption rose a seasonally-adjusted 0.5% in Q1, which was unchanged from Q4, despite a small uptick in the unemployment rate. Government consumption jumped 1.0% in Q1, up from the 0.2% growth recorded in Q4. Meanwhile, fixed investment declined 1.2%, contrasting the 2.3% expansion in Q4. The fall in investment was largely attributable to lower investment in the mainland economy, while investment in the offshore economy remained healthy.
Exports rose 2.2% in Q1, largely due to strong exports of services, contrasting the 0.7% decrease in Q4. Imports rose 2.4% in Q1, up from 1.8% in Q4. All in all, the external sector neither contributed to nor deducted from economic growth in Q1, contrasting the 0.8 percentage-point deduction in Q4.
Despite the poor start, economic prospects for this year are quite promising, with the economy set to benefit from healthy investment in the oil sector. Moreover, a still-tight labor market and a likely fall in inflation should boost real wages and private consumption.
Author: Edward Gardner, Economist