Norway: GDP numbers on the weak side – Nordea Markets

Erik Johannes Bruce, Research Analyst at Nordea Markets, notes that Norway’s GDP grew by 0.5% q/q (2.5% y/y) in Q2 after a growth at 0.4% in Q1 (revised from 0.6%), while Nordea’s forecast was 0.3%, consensus was 0.5% and Norges Bank’s forecast was 0.7%.

Key Quotes

“A sharp drop in electricity production pulled down mainland growth by 0.2% points and corrected for that mainland growth was as expected by Norges Bank.”

“Q4 was revised up. Add to this that the demand picture was very strong. Private consumption and business investment rebounded strongly after a weak Q1.”

“Employment grew by 0.3% q/q in Q2 down from 0.5% in Q1. That was somewhat on the weak side to Norges Bank forecast. (0.4-0.5%). Still all in all today’s figures will confirm Norges Bank’s view. Growth in the economy is strong and the labour market improves.”

“There are no reasons for Norges Bank to change view on the economy. So with NOK clearly on the weak side and inflation on the high side there are good reason to expect not only a hike in September, but also a revision up of the rate path.”