Economic growth accelerates to one-year high in Q2

Norwegian economy finally escapes technical recession: As anticipated by our Consensus, nationwide GDP growth gained pace in Q2, rising to 0.8% on a seasonally adjusted quarter-on-quarter basis from an upwardly revised 0.1% rise in the first quarter and marking the strongest increase in a year. Conversely, the mainland economy—which excludes petroleum activities and related ocean transport—grew at half the pace it did in the prior quarter (Q2: +0.6% s.a. qoq; Q1: +1.2% s.a. qoq). Meanwhile, on an annual basis, nationwide economic activity declined for a third consecutive quarter in Q2, recording a seasonally adjusted 1.3% fall—largely in line with our Consensus—following the previous period's 0.6% decline and marking the worst reading since Q3 2023. Conversely, annual growth in the mainland economy accelerated to 2.0% (Q1: +1.7% s.a. yoy).

Q2 improvement was broad-based: The faster quarterly expansion in nationwide GDP reflected improved readings for public consumption, fixed investment and exports. Government spending edged up to a 0.5% expansion in Q2 (Q1: +0.3% s.a. qoq), and fixed investment rebounded in Q2, growing 4.6% and contrasting the 5.2% decrease in Q1. Additionally, exports of goods and services bounced back, growing 0.8% seasonally adjusted quarter on quarter in Q2, marking the best reading since Q2 2024 (Q1: -2.2% s.a. qoq). A pickup in oil and gas exports—making up over half of goods shipments—following a slight decline in Q1 buttressed the reading. Meanwhile, imports of goods and services—which contribute negatively to GDP—declined at a slower rate of 0.6% in Q2 (Q1: -2.6% s.a. qoq). Less positively, private consumption growth decelerated to 0.2% in Q2, below the first quarter's 1.7% expansion.

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