Norway: The economy expands in April and Norges Bank’s Q2 business survey points to solid future growth
According to monthly GDP data released by Statistics Norway, economic output increased 0.2% in April compared to the previous month in seasonally-adjusted terms, matching March’s expansion. In the wider February–April period, the total economy recorded flat growth from the previous rolling quarter, as it did according to revised data for January–March (previously reported: -0.1% quarter-on-quarter).
Mainland GDP—which excludes hydrocarbon extraction activity and related transport—expanded 0.3% in April, matching March’s growth. In February–April, mainland GDP rose 0.4% from the previous rolling quarter, equaling January–March’s growth.
In April, private consumption fell 0.5% compared to the previous month in seasonally-adjusted terms, contrasting the 1.0% growth recorded in March. Government consumption, meanwhile, fell 0.3% in April, down from the 0.1% fall in March. Fixed investment, one of the most volatile GDP components on a month-to-month basis, surged 7.3% in April, up from 1.9% in March. Turning to the external sector, exports rose 1.5% in April, contrasting the 0.1% fall in March, while imports rose 1.3%, contrasting the 0.5% decrease in March.
Going forward, Norges Bank released the results of its quarterly survey of businesses on 11 June that indicated strong economic growth in the next six months. Higher oil investment, purchases of technology-related services and large-scale public investment all supported growth in the past three months and are expected to continue doing so, the results suggest. The survey also points to a tight labor market—businesses now see annual wage growth of 3.2% in 2019, which is higher than the 3.0% expectation reported in the previous survey. Overall, the survey aligns with the widely-held view that the economy should gain momentum this year, particularly on stronger investment and higher wages. Downside risks emanate from a tighter monetary policy, a slowdown in the Eurozone, Brexit uncertainty and rising global trade protectionism.