The Norwegian economic growth is likely to have come below Norges Bank’s forecast for the fourth quarter. According to a Nordea Bank research report, the mainland GDP growth is likely to have come in at 0.3 percent quarter-on-quarter in the fourth quarter, a slowdown from 0.7 percent seen in the third quarter and one-tenth below Norges Bank’s forecast.
Norway’s mainland economy expanded above its trend level in the initial three quarters of 2019. The growth is believed to have decelerating towards the trend in the December quarter.
“Given the monthly GDP figures until November and assuming growth of 0.2 percent m/m in December (and no historical revisions) we end up with a Q4 growth at 0.3 percent q/q, which is close to trend”, said Nordea Bank.
Also, the fourth quarter employment data is set to release next week alongside with the GDP figures. The fourth quarter employment is likely to have grown 0.2 percent, which would be consistent with the fourth quarter Regional Network Survey but below the central bank’s forecast of 0.3 percent.
The central bank’s December rate path had one hiking bias. If the above mention forecast is realised, slightly weaker GDP and employment growth figures than Norges Bank’s view should contribute negatively to the March rate path, stated Nordea Bank.
“Even though the arguments for a hiking bias have softened, this does not imply that we should expect rates to be cut anytime soon. The most likely outcome would still be a rate path that signals unchanged rates going forward”, added Nordea Bank.
