GDP in Norway

Norway - GDP

Economy falls into contraction in Q1 2022

Momentum was set back in the first quarter of 2022, with GDP declining 1.0% on a seasonally-adjusted quarter-on-quarter basis, worsening from the previous quarter’s stable reading. Q1’s outturn marked the weakest result since Q2 2020. The economic performance of the Norwegian economy was hindered by the spread of the Omicron variant and the subsequent implementation of containment measures. As a result, the mainland economy—which excludes petroleum activities and related ocean transport—contracted 0.6% on a seasonally-adjusted quarter-on-quarter basis in Q1, worsening from the 1.4% expansion in Q4 2021. Once said restrictions were removed in mid-February, activity picked up in the second half of the month and accelerated in March, but it was not enough to offset January’s decline.

Domestically, private consumption was hit hard and declined a seasonally-adjusted 1.5% quarter-on-quarter in the first quarter, contrasting with the fourth quarter’s 2.8% expansion. That said, the increase in employment levels in the quarter likely cushioned the fall somewhat. Similarly, government spending also swung into a contraction in the quarter (Q1: -1.4% s.a. qoq; Q4 2021: +0.1% s.a. qoq). Lastly, fixed investment flatlined in the first quarter, which was a marked deterioration from the prior quarter’s 3.3% expansion.

On the external front, exports of goods and services dropped 3.5% on a seasonally-adjusted quarter-on-quarter basis in Q1, worsening from the 2.5% contraction posted in Q4. The fall was largely due to a decline in exports of crude oil and natural gas. Meanwhile, imports of goods and services growth moderated, growing a marginal 0.2% in Q1, which was below the prior quarter’s 1.2% increase. Consequently, the external sector detracted 1.3 percentage points from the overall reading, matching Q4 2021’s detraction.

On an annual basis, total economic activity growth softened in Q1, coming in at 4.8%, slightly below Q4 2021’s 5.3% increase. Conversely, mainland economic growth accelerated to 5.8% year on year in Q1, up from the prior quarter’s 5.2% rise.

FocusEconomics Consensus Forecast panelists see total GDP expanding 3.5% in 2022, which is unchanged from last month’s forecast, and growing 2.1% in 2023. In terms of mainland GDP, our panelists project growth of 3.8% in 2022, which is unchanged from last month’s estimate, and 2.0% in 2023.