Norway Avoids Economic Slowdown as Consumer Spending GrowsSaleha Mohsin
Norway’s expansion unexpectedly accelerated in the first quarter as consumers supported growth, easing pressure on the central bank to cut interest rates again.
Seasonally adjusted gross domestic product, excluding oil, gas and shipping output, grew 0.5 percent, after expanding 0.4 percent in the prior three months, Oslo-based Statistics Norway said Wednesday. Growth was seen at 0.3 percent in a Bloomberg survey and estimated at 0.35 percent by Norway’s central bank. Total output grew 0.2 percent.
“Growth kept up better at the start of the year than expected,” Erik Bruce, an economist at Nordea Bank AB in Oslo, said in a note. “But the downward revision of second part of last year, the rather weak demand picture and zero growth in employment point the other way. We think Norges Bank will view the figures as broadly in line with their view on the economy.”
Norway’s central bank kept rates unchanged this month and reiterated that it’s prepared to lower rates again after easing in December, even as it walked back a prediction of a more severe slowdown.
A plunge in oil prices since last year is weighing on an expansion in Norway, which gets about 20 percent of its economic output from petroleum. Crude producers and oil service companies such as Statoil ASA have cut thousands of jobs, sending ripples through the rest of the economy and driving unemployment to a nine-year high.
The government last week cut growth forecast for the mainland economy to 1.3 percent this year from 2 percent in October. While Finance Minister Siv Jensen said on May 12 that Norway isn’t facing a “crisis,” the government still boosted oil money spending to a record to cover budget needs as unemployment climbs.
The krone has gained 4.3 percent this year, on an import-weighted basis, as concern over a deeper slump eased amid a recovery in oil prices. It’s still down 7.6 percent over the past 12 months, which has helped non-oil related exporters.
The currency rose 0.1 percent to 8.3876 per euro as of 11:01 a.m. in Oslo.
Exports fell 3.8 percent in the first quarter, while petroleum and shipping industry output fell 0.7 percent, the statistics agency said. Consumer spending rose 0.7 percent.