Norway’s Economy Suffered Record Contraction in Covid Crisis

(Bloomberg) -- Norway’s economy suffered its deepest contraction on record in the second quarter, after the full effect of the Covid-19 lockdown made itself felt.

Mainland GDP, which adjusts for Norway’s offshore industry, shrank 6.3% from the previous quarter, Statistics Norway said on Tuesday. The economy grew 3.7 in June from May, signaling the rebound is under way, though output was only halfway back from the trough, the agency said.

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“The second quarter was almost three times as bad as the worst quarter during the financial crisis,” the head of the National Accounts unit at Statistics Norway, Pal Sletten, said in a statement.

Until now, the biggest quarterly drop in GDP had been 2.3% in the final quarter of 2008, with records going as far back as 1978.

Despite the severe economic decline last quarter, Norway is facing a milder recession than the rest of Europe, after successfully controlling the spread of Covid-19 early on. And thanks to its $1.2 trillion wealth fund, Norway has been able to add record levels of stimulus without tapping debt markets.

Still, last week Norges Bank warned of “considerable uncertainty surrounding the further economic recovery.” The bank, which has had its main interest rate at a record low of zero since the Covid-19 crisis hit in March, cited an uptick in the spread of the virus, which may force the reintroduction of restrictions on movement.

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