Norwegian mainland economy grows below forecast in Q1, declining electricity production drags down growth

Norwegian mainland growth in the first quarter was dragged down by declining electricity production and weak fishery. On a quarter-on-quarter basis, mainland GDP grew 0.3 percent, below consensus expectations of 0.4 percent and Norges Bank’s 0.6 percent forecast. The fourth quarter data was upwardly revised to 1.1 percent from 0.9 percent.

The first quarter figure was dragged down approximately 0.3 percentage points by falling electricity production and poor fishery. Meanwhile, the fourth quarter was pulled up by temporary factors. This explains why growth went from 1.1 percent to 0.3 percent. The underlying picture is stronger. On a year-on-year basis, the GDP grew 2.4 percent.

The only softness seen in the figure is mainland business investments that dropped 2.6 percent quarter-on-quarter, but that was after a rather solid third quarter and fourth quarter. Norges Bank will give more weight to the fact that private consumption grew by a sound 0.5 percent. Mainland export also grew at a sound pace. Housing investment is now also increasing again, noted Nordea Bank.

Norges Bank had hinted that it was prepared for the first quarter growth to come below its March forecast at the meeting in May.

“It will say that todays’ figure is well in line with its view. It could actually give most weight to employment which grew by 0.5 percent q/q above its forecast at 0.4 percent”, stated Nordea Bank.