Norway: Economic growth accelerates in the third quarter
The economy gained further traction in the third quarter, with GDP expanding 3.8% on a seasonally-adjusted quarter-on-quarter basis, accelerating markedly from the prior quarter’s 1.0% increase.
The third quarter’s improvement was broad-based, supported by the further removal of domestic Covid-19 restrictions. Private consumption growth accelerated to 6.0% in seasonally-adjusted quarter-on-quarter terms in Q3, from 1.1% in the prior quarter. The result was likely supported by a notable increase in employment levels: Seasonally-adjusted data revealed that employment in Q3 was similar to its pre-pandemic Q4 2019 level. Moreover, government spending grew at a quicker rate in the quarter (Q3: +1.3% s.a. qoq; Q2: +0.9% s.a. qoq). Lastly, fixed investment returned to growth in Q3, increasing 1.1% in seasonally-adjusted quarter-on-quarter terms (Q2: -0.2% s.a. qoq).
On the external front, exports of goods and services expanded at a faster rate in Q3, with growth coming in at 6.5% on a seasonally-adjusted quarter-on-quarter basis (Q2: +1.8% s.a. qoq). Similarly, imports of goods and services increased at a stronger pace (Q3: +5.8% s.a. qoq; Q2: +4.7% s.a. qoq). Consequently, the external sector added 0.6 percentage points to the overall reading in Q3, contrasting the prior quarter’s 0.7 percentage-point subtraction.
The mainland economy—which excludes petroleum activities and related ocean transport—expanded 2.6% on a seasonally-adjusted quarterly basis in Q3, quickening from the 1.1% increase recorded in the previous quarter. Meanwhile, on an annual basis, total economic activity growth came in at 5.1% in Q3, moderating from Q2’s 6.2% expansion. Lastly, mainland economy growth eased to 5.0% year-on-year in Q3 from 7.7% in the previous quarter.
Commenting on the role of consumers in the economy’s performance, analysts at Fitch Solutions explained:
“Private consumption will be a key driver of recovery in the quarters ahead as we expect restrictions in Norway to remain light in the coming quarters compared with those in Q1 2021 and before. […] As of September 2021, private consumption had already surpassed December 2019 levels by 1.6%. Granular consumption data from Statistics Norway’s national accounts show how consumption patterns are also returning to pre-pandemic normality. Since April 2021, household consumption has been shifting towards services as the economy reopens, while consumption in goods is stagnating. We believe that consumers are already spending their excess savings accrued during lockdowns, supported by an ongoing improvement in labour market conditions.”