Norway’s economy continued to grow in the first quarter, adding evidence that it remains more resilient to soaring prices and credit costs than the central bank has projected.
(Bloomberg) — Norway’s economy continued to grow in the first quarter, adding evidence that it remains more resilient to soaring prices and credit costs than the central bank has projected.
Mainland gross domestic product, which adjusts for Norway’s offshore industry, expanded 0.2% from the previous three months, when it grew a revised 0.6%, the statistics office said on Friday. This compares with a median projection of 0.1% increase in a Bloomberg survey of analysts, while the central bank had forecast a 0.1% contraction.
The richest Nordic nation on a per capita basis has so far been steering clear of a recession, with limited fallout from an inflation rate that’s near three-decade highs and from monetary tightening that started already in September 2021 ahead of many other advanced nations.
The central bank in March forecast mainland gross domestic product to grow 1.1% for the full year, while projecting the expansion to slow to 0.5% in 2024. That’s before the government’s announcement of revised budget on Thursday, which is raising the spending of Norway’s fossil-fuel wealth and seen contributing as much as 0.4 percentage points to economic output this year.
Read More: Norway Raises Oil Wealth Spending to Shield Welfare Services
Friday’s data is likely to add to speculation that Norges Bank will need to accelerate or extend its benchmark rate hikes next month and during the summer, compared with its current projection of a quarter-point hike to 3.5% in June and some probability of a similar increase by September.
Household purchases of goods and housing investment declined, while business investments and exports grew, the statistics office said. It said the trade in goods was mainly affected by reduced car purchases compared with the fourth quarter when Norwegians rushed to buy automobiles due to tax hikes implemented from January.
Norway’s larger neighbor Sweden, pegged by the OECD as the worst-performing economy this year in the European Union, managed to avoid a recession in the first quarter. Among Norway’s other regional peers, Denmark’s economy is set to grow 0.5% this year, while Finland’s gross domestic product will probably stagnate, Nordea Bank Abp, the largest Nordic lender, forecast earlier this week.
–With assistance from Joel Rinneby.
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