Norwegian mainland economy expands above expectations in Q1 2017

Norway’s mainland economic growth is evidently picking up at a much rapid rate than projected by the Norges Bank. The mainland GDP grew 0.6 percent quarter-on-quarter in the first quarter after an upwardly revised 0.4 percent growth recorded in the prior quarter. On a year-on-year basis, the mainland economy expanded 1.6 percent. The sequential growth came in above consensus and central bank’s expectations of 0.5 percent and 0.4 percent respectively.

The main scenario was quite anticipated. Growth was comparatively widespread with sound growth in production of goods as well as services. Oil exposed sectors continue to record negative growth; however, the negative drag is waning, noted Nordea Bank in a research report.

Demand side economic factors saw a mixed picture. Private consumption expanded 0.6 percent sequentially in the first quarter, while housing investment rose 3 percent. But investment among companies dropped on a sequential basis. However, these figures are volatile and the year-on-year growth is solid. Export growth recovered solidly in the first quarter, following a subdued print seen in the fourth quarter. However, it is still too early to conclude that the subdued trend from 2016 is ending, stated Nordea Bank.

Employment grew 0.1 percent in the March quarter after a revised growth of 0.2 percent in the prior quarter. On a year-on-year basis, employment grew 0.6 percent. With inflation being quite below the target rate and still spear capacity in the economy a rate rise is far away, added Nordea Bank.