Norway: Oil and gas output prop up growth in Q3 as economic recovery continues
November 14, 2017
In Q3, the economy expanded a seasonally-adjusted 0.7% from a quarter earlier, slowing markedly from the notable 1.1% growth recorded in Q2 but nonetheless confirming that the economic recovery was still firmly underway. The print was largely attributable to the ongoing rebound of the country’s offshore oil and gas sector, which had returned to growth in Q2 after contracting sharply at the outset of the year. Meanwhile, mainland GDP, which excludes petroleum activities and related ocean transport, experienced stable growth in Q3 from a quarter earlier (Q3: +0.6% quarter-on-quarter), following a slight downward revision to Q2’s result (previously reported: +0.7% qoq). Moreover, the mainland GDP print beat market expectations of a weaker 0.5% expansion.
In annual terms, the health of the economy appeared particularly healthy. In Q3, total GDP growth jumped to 3.2% from a year earlier (Q2: +0.1% year-on-year; previously reported, Q2: +0.2% yoy), while mainland GDP grew 1.9% (Q2: -0.2% yoy).
Domestic demand declined in the quarter on weakened consumption dynamics. Despite strong employment data, growth in household consumption moderated to 0.6% (Q2: +0.7% qoq); spending on commodities came up especially short. That said, car purchases were stronger in the quarter. Meanwhile, growth in government consumption eased to 0.5% (Q2: +0.8% qoq). Moreover, fixed investment growth slowed significantly, falling to 0.3% quarter-on-quarter (Q2: +1.5% qoq) as petroleum-related investment declined. Mainland investment posted solid growth, largely explained by a major expansion of the power grid.
Hearteningly, the external sector continued expanding—albeit more slowly—in Q3 after experiencing a turnaround a quarter earlier. Exports grew 0.9% from the previous quarter (Q2: +2.1% qoq; previously reported, Q2: +1.0% qoq) as shipments of both traditional goods—which exclude crude oil, natural gas, natural gas condensates, ships and oil platforms—and refined goods expanded. Moreover, exports of services also experienced growth. Imports, on the other hand, contracted more sharply in Q3, shrinking 1.8% (Q2: -0.2% qoq; previously reported, Q2: -0.4% qoq) as imports of traditional and large capital goods fell. Imports of services, however, rose.
Author: Christopher Thomas, Economist