Norwegian mainland GDP falls 0.3 pct sequentially in February, Norges Bank likely to hike rates in September

The Norwegian monthly national accounts data indicated that the mainland GDP dropped 0.3 percent sequentially in February. Private consumption rose 0.1 percent, whereas public consumption dropped 0.3 percent. For mainland Norway, gross investments fell 2.1 percent sequentially.

Services incidental to petroleum extraction fell 5.1 percent sequentially; however, they rose 3.9 percent three-month-on-three-month. This is an indication of higher demand from the petroleum sector is feeding into the economy. Exports of traditional goods rose 1.2 percent in February and rose 5.8 percent three-month-on-three-month. Imports of traditional goods fell 2.3 percent sequentially. Total GDP growth was down 0.4 percent sequentially.

The three-month moving average indicated that growth in mainland Norway of 0.6 percent, compared to 0.9 percent in January. Manufacturing added to the economic growth in February, while other goods production contributed negatively. The rise for private services was modest, while production of public services dropped.

According to a DNB Markets research report, if the mainland GDP grows 0.3 percent sequentially in March, a rebound from the fall in February, the quarter-on-quarter GD growth might come in at 0.3 percent in the first quarter of 2019. Norges Bank, in the MPR 1/19, projected 0.64 percent quarter-on-quarter growth in the first quarter.

“We think today’s growth figures provide some support for a rate hike in September rather than June. We expect that Norges Bank can continue with a further hike early next year”, added DNB Markets.