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Fast Comment NorwayMainland GDP growth still stronger than trend

  1. Mainland GDP growth at 0.6% in Q4 after 0.7% in Q3 (revised from 0.6%)
  2. Growth pulled down by oil-related activities in Q4, but should be temporary
  3. Development well in line with Norges Bank's forecast
Mainland GDP growth at 0.6% in Q4 after 0.7% in Q3 (revised from 0.6%)
Seasonally adjusted growth in mainland GDP was 0.6 percent in Q4 last year. This was in line with the consensus and also with Norges Bank’s expectation, while we had expected growth to pick up to 0.7 percent. Q3 growth was revised up to 0.7 percent from 0.6 percent, and for the year as a whole, mainland GDP was up 1.8 percent, compared to 1.0 percent in 2016.
Development well in line with Norges Bank's forecast
Looking at the production side, growth was pulled up by building and construction activities, manufacturing and services, however, activity in the petroleum sector declined in Q4, pulling down related services. On the demand side, growth was pulled up by private consumption, which contributed 0.4 percentage points (p.p.) to growth in Q4, similar to Q3. Public demand made a strong contribution, but much of the demand was related to the delivery of three new combat aircrafts. Household investment in dwellings, which has had almost continuous growth from early 2015, fell by 4.5 per cent in Q4. Business investment made a rather small contribution to GDP growth of 0.1 percent in Q4, down from 0.5 percent in Q3. Mainland exports had improved, with traditional exports growing by 0.7 percent after showing steady improvement through all of 2017. On the other hand, imports of traditional goods had also increased, so in sum net exports pulled GDP growth down, but again a large chunk of the increase in imports was due to the delivery of the three combat aircrafts. Employment growth was healthy at 0.4 percent, after growing by 0.4 percent also in Q4. The growth in hours had been even stronger, at 0.6 percent, implying productivity growth was zero. All told, the mainland economy continued to grow at a healthy clip in Q4, and the weakness in oil-related business we believe to be temporary, as investment growth on the Norwegian shelf is set to pick up further this year. Today’s numbers should be well in line with Norges Bank’s expectation, and sentiment indicators suggest growth can hold up in the near-term, also in line with Norges Banks forecast.

Source: Macrobond


Kari Due-Andresen

Chief Economist Norway

Norway and UK

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