Weak growth remains the hallmark of the Norwegian economy, but it is in better shape than Norges Bank imagined.
The issue is updated.
Gross National Product (GDP) Mainland NorwayMainland NorwayNorway's mainland GDP, also called the mainland economy, ignores the extraction and shipping of oil and gas abroad, among other things. It rose 0.2 percent in the first three months of 2024. That was exactly as economists previously expected, according to estimates obtained by Bloomberg.
There has been a cautious and relatively steady development of the Norwegian economy in the past year.
– Over the past year, increases in prices and interest rates have led to weak development in household consumption, reduced investment in housing, and a slowdown in the Norwegian economy. We will still see this development in the first quarter of 2024, says Pall Sletten, Head of the National Accounts Department at Statistics Norway.
In the fourth quarter of last year, the mainland economy also grew by 0.2 percent compared to the previous quarter.
Stronger than Norges Bank assumed
Norgesbank was on his side estimated The Norwegian economy recorded zero growth in the first and second quarters of this year, so development is stronger than they imagined.
The central bank has indicated that the interest rate in this country will likely remain at 4.5 percent until the fall. In March, central bank governor Ida Wolden-Basch said the most likely cut would be in September, but earlier this month the signal was that “it may be necessary to keep interest rates high for a little longer” than Norges Bank had previously envisaged.
The background to this was, among other things, that economic activity was slightly higher than expected, that wage growth might look stronger than expected, and that the krone was weaker than assumed. At the same time, price inflation has calmed more than the central bank had envisioned.
Growth against oil
When looking at different industries and industries, the industrial and service industries that fuel the oil industry have helped drive economic growth. Suppliers to the oil industry are one of the areas of the Norwegian economy that is performing best at the moment.
– Good market conditions and favorable tax conditions have contributed to high investment activity on the Norwegian continental shelf for more than a year now. Activity has increased in mainland industries that provide goods and services to the oil and gas industry, says Sletten at Statistics Norway.
Health and care services and trade are other industries that have rebounded.
Heavy in the construction industry
On the other hand, the construction industry once again helped drag down economic growth. It's been tough times, especially when it comes to new home construction lately. Overall output in the construction industry has now fallen for four consecutive quarters, according to Statistics Norway.
– The decline in the construction industry is linked to the fact that household investment in housing fell sharply last year. Sletten says this has led to a decline in housing construction activity.
The agricultural industry also declined. Among other things, the industry has faced disease-related challenges this winter.
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