Norway Economic Growth Picks Up in Second Quarter on Investments

(Bloomberg) --

Norway’s economic growth accelerated in the second quarter, keeping up momentum as the central bank ponders whether to raise interest rates again as soon as next month.

Mainland gross domestic product, which excludes oil and shipping, expanded 0.7% in the quarter, Statistics Norway said in a statement on Thursday. That was up from a revised 0.5% in previous quarter. A Bloomberg survey of 13 economists predicted a quarterly expansion of 0.8%, in line with the central bank’s forecast.

Key Insight:

• Economic growth in the second quarter was pulled up by domestic demand and capital investments, while exports slid.
• Overall GDP growth, which includes oil and gas production and shipping, rose 0.3% in the quarter.
• Norges Bank started to unwind a record stimulus in September last year, and has now raised its key rate to 1.25%, seeking to cool down an economy that has benefited from a pick up in its massive oil sector.
• The central bank, which has signaled another hike could come next month, struck a more cautious tone in an interim meeting in August, warning that escalating trade tensions and Brexit uncertainty casts doubt on its tightening plans.

Markets

• The krone weakened 0.15% to 10.04 per euro at 08:09 a.m. in Oslo.

What Economists Say

• “Figures confirm continued above trend growth despite global slowdown. In isolation, supports the case for a September hike,” said Frank Jullum, chief economist at Danske Bank A/S.
• “Norges Bank will view today’s report as very much in line with its expectations. Hence, no need to deviate from the rate path which suggests a September hike,” said Erik Bruce, senior economist at Nordea.
• “Overall activity has bounced back following what was a temporary slowing by the start of the year,” said Marius Gonsholt Hov, senior economist at Handelsbanken.

Know More

• For more details, see this table.

To contact the reporter on this story: Sveinung Sleire in Oslo at ssleire1@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net

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