Norway’s economy grew twice as fast as estimated last quarter, underpinning bets the central bank will need to abandon a forecast for lower interest rates. The krone soared to its highest in two months versus the euro.
Seasonally adjusted gross domestic product, excluding oil, gas and shipping, grew 1.2 percent, after expanding 0.5 percent in the first quarter, Oslo-based Statistics Norway said today. Growth was seen at 0.6 percent, according to the median of 12 economist estimates compiled by Bloomberg. Total output grew 0.9 percent, also beating the 0.5 percent estimate.
“Today’s numbers should without a doubt close the door for a rate cut,” said Erica Blomgren, chief strategist at SEB AB. “Undoubtedly, Norges Bank will have to revise its mainland GDP forecast for 2014 higher.”
Consumers are sustaining an expansion in Scandinavia’s richest economy per capita as the labor market improves and falling mortgage rates propel a recovery in home prices. A 1 percent decline in the krone against the euro over the past year has also helped exporters such as Norsk Hydro ASA.
The krone rose against all major currencies tracked by Bloomberg today. It surged as much as 0.7 percent against the euro to 8.1561, the highest since June 18, as of 10:33 a.m. in Oslo.
Consumer spending rose 0.8 percent in the quarter, while investment climbed 1.4 percent. Exports fell 0.6 percent and imports increased 0.9 percent, the agency said. Petroleum and shipping was unchanged and final domestic use of goods and services increased 1.6 percent.
The central bank of western Europe’s largest oil producer signaled in June it may need to lower its deposit rate from 1.5 percent to support growth. A key survey by Norway’s statistics agency showed in June that oil companies predict investments will drop by as much as 21 percent next year as the industry grapples with high costs.
“We still believe rates will be kept on hold for a very long period,” said Erik Bruce, senior economist at Nordea Bank AB. “The drop in oil investments, which we believe will come, hasn’t influenced the economy yet.