Norway Economic Expansion Slows as Euro Area Downturn WeighsJosiane Kremer
Norway’s economic expansion slowed in the fourth quarter as a recession in the debt-stricken euro area hurt exports.
Gross domestic product, excluding oil, gas and shipping, grew 0.3 percent, slowing from a revised 0.8 percent in the prior quarter, Oslo-based Statistics Norway said today. Growth missed the 0.5 percent median estimate of 12 economists in a Bloomberg survey. Total economic output expanded 0.4 percent, in line with estimates.
A recession in the Europe, Norway’s biggest trading partner, caused exports to fall 0.1 percent in the quarter, the agency said. Companies such as Norsk Hydro ASA, Europe’s third-largest aluminum maker, are also struggling as the krone hit a record this month on an import-weighted basis, pushing up the cost of exports.
The central bank kept its benchmark interest rate at 1.5 percent in December and stuck to a plan to raise its rate as early as March. Policy makers have cut the benchmark by 0.75 percentage point since December 2011, in part to keep the krone in check after it emerged as a haven from Europe’s debt crisis.
“Combined with still-soft core inflation and a stronger-than-assumed krone exchange rate in import-weighted terms, fading momentum in the economy in late 2012 suggests that that the next Monetary Policy Report due in March should sound dovish when it comes to the outlook for policy rates,” Stein Bruun, chief economist at SEB AB in Oslo, said in a note to clients.
The krone was unchanged against the euro at 7.3795 by 11:12 a.m. in Oslo.
Norges Bank predicts the mainland economy will expand 3 percent this year. This compared with an economic contraction of 0.3 percent in the 17-nation region, according to European Central Bank forecasts.