Nordic & Swiss Economics

Norway’s GDP (Q3)

Nordic & Swiss Data Response
Written by Melanie Debono

This morning’s release of Q3 GDP data from Norway confirms that the economy is faring much better than its Nordic peers. The economy looks set to lose some pace in the coming months but we do not think it will slow by enough to convince the Norges Bank to start reversing its recent rate hikes.

Norwegian economy to stay in a class of its own

  • This morning’s release of Q3 GDP data from Norway confirms that the economy is faring much better than its Nordic peers. The economy looks set to lose some pace in the coming months but we do not think it will slow by enough to convince the Norges Bank to start reversing its recent rate hikes.
  • The 0.7% q/q increase in mainland GDP in Q3 matched Q2’s outturn and left GDP 2.9% higher than it was in July-September last year. Yet another fall in output in petroleum and ocean transport means that total GDP (i.e. including oil and gas) stagnated. (See Table 1.)
  • The expenditure breakdown was encouraging and showed that fixed mainland investment rose sharply by 5.3% in quarterly terms in Q3 while household spending and government consumption both grew again (by 0.4% and 0.9% respectively). What’s more, the press release noted that household spending could have increased by more had it not been for an apparent one-off plunge in car sales at the start of the quarter. A bigger increase in mainland exports compared to mainland imports means that net trade was no longer a drag on GDP as it had been for the past three quarters.
  • We think that the mainland economy is likely to lose a bit of pace over the coming months as previous declines in the oil price feed through into lower manufacturing activity. (See Chart 1.) But if we are right to expect oil prices to rise next year, this dampening effect should prove short-lived and will be offset by the ongoing oil investment boom.
  • All told, although we think the economy will slow somewhat, we still expect Norway to continue to outperform its Nordic peers over the coming two years. And we do not expect the economy to slow by enough to convince the Norges Bank to start reversing its recent series of deposit rate hikes; we expect the Bank to keep the deposit rate unchanged at 1.50% until at least the end of 2021.

Chart 1: Brent Crude Price & Norway Manufacturing Output

Sources: Refinitiv, Capital Economics

Table 1: Norway’s GDP

Total GDP

Mainland GDP

Household Consumption

Mainland Investment

Government Consumption

Mainland Exports

Mainland Imports

% q/q

% y/y

% q/q

% y/y

% q/q

% q/q

% q/q

% q/q

% q/q

Q4

0.4

1.6

1.1

2.5

0.3

2.1

0.1

-0.1

0.7

Q1

-0.1

1.2

0.4

2.4

0.5

-2.0

1.0

3.9

4.4

Q2

0.2

1.2

0.7

2.5

0.3

2.1

0.9

0.3

0.4

Q3

0.0

0.6

0.7

2.9

0.4

5.3

0.9

0.6

0.5

Source: Refinitiv


Melanie Debono, Europe Economist, +44 20 3750 0991, melanie.debono@capitaleconomics.com