Norwegian mainland GDP grows strongly in October, Norges Bank likely to hike rate to 1 pct in March 2019

Norwegian mainland GDP rose sequentially in October. On a month-on-month basis, the economy grew 1 percent. Private consumption was up 0.4 percent, public consumption grew 0.4 percent, while gross investments dropped 3.3 percent. Exports of traditional goods were up 3.5 percent in October, while imports of traditional goods were up 2.2 percent. The total GDP grew 0.8 percent.

The three-month moving average indicated that growth in mainland Norway came in at 0.2 percent, compared with the 0.3 percent seen in the third quarter. Private consumption came in flat, while public consumption rose 0.4 percent and gross investments were up 1.4 percent. Exports of traditional goods were up 1.3 percent in the month, while imports of traditional goods dropped 0.2 percent. Total GDP grew 0.2 percent.

The three-month average continues to be on the weak side, as agriculture production and private consumption pull the average down, in spite of picking up in October. These factors are viewed as temporary because of a warm summer and high electricity prices, and the October reading underpins this view, noted DNB Markets. The strong growth in October, along with a positive report from Norges Bank’s regional network imply that growth will pick up ahead.

“We expect Norges Bank to hike the policy rate to 1.00 percent in March next year, but expect the rate path presented on Thursday to be adjusted down somewhat in 2020 and 2021”, added DNB Markets.