Norwegian mainland economy likely to have grown year-on-year in Q1 2018

The Norwegian mainland economy has been robust lately; however, running indicators point towards a deceleration in the first quarter. Subdued growth might raise the uncertainty regarding the hike in September, noted Nordea Bank.

The first quarter data is set to be released in the next week. According to Nordea Bank, the mainland GDP is expected to have grown 0.4 percent sequentially and 2.4 percent year-on-year. Growth had picked up well in 2017 and indicated towards continued solid growth in 2018. Employment rose robustly stimulating consumer sentiment, production was on the way up even in oil related sectors and robust growth abroad and a subdued NOK should help mainland export. Falling residential investments was the only factor pulling growth down.

But, hard data from production indexes and retail sales indicates towards a rather subdued or falling production in construction, manufacturing and the retail sector. Softness in the construction sector is no surprise given the fall in housing prices last year. However, subdued retail sales and especially manufacturing production falling close to 1 percent sequentially are huge surprises.

“Our forecast is below Norges Bank’s forecast at 0.6 percent q/q. If we are right it will add to the impression that key figures in Norway is on the weak side. However there are some factors which could dampen the impact on Norge Bank’s view”, stated Nordea Bank.

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