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Fast Comment NorwayPreview: Mainland GDP (Tuesday)

  1. We estimate mainland GDP growth of 0.6 percent in Q1
  2. Norges Bank expects 0.72 percent
  3. Even if we are proven right, the outlook is still supportive of a rate hike in September
Mainland GDP probably somewhat weaker than expected by Norges Bank
The first release of mainland GDP for Q1 2018 is due next Tuesday. We estimate quarterly growth of 0.6 percent, similar to the growth rate seen in Q4 2017. In comparison, Norges Bank has forecast a further acceleration, to 0.72 percent. Estimates from the contacts in Norges Bank’s Regional Network suggest output growth of 0.69 percent. In summary, we foresee a somewhat slower start to this year than signalled by Norges Bank and its network contacts. However, the expected growth rate is still above trend and thus compatible with our view that overall capacity utilisation will normalise this year. The key reasons for a GDP figure somewhat below Norges Bank’s short-term estimate have been well communicated. However, to recap, the main drivers are: 1) retail spending/goods consumption has been weaker than expected, as has manufacturing output, even if petroleum investments are now rising again; 2) construction activity levelled out in Q1 this year, following sharp increases throughout 2017; 3) contrary to Norges Bank’s expectations, the registered unemployment rate (S.A) has not declined any further this year. Based on these factors, we were tempted to lower our Q1 estimate even further, however there are reasons to believe the service sector has continued to add significantly to growth. As such, we expect a relatively benign downside surprise, relative to Norges Bank’s estimate. If we are proven right, the outlook is still supportive of a rate hike in September.



Marius Gonsholt Hov

Senior Economist


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