OSLO: Norway’s economy lagged expectations last quarter by barely growing in part due to a lower fisheries catch, with underlying trends likely still keeping the nation’s central bank on hold before it plans more easing next year.
Mainland gross domestic product (GDP), which excludes Norway’s offshore energy and shipping industry, grew 0.1% in the July-to-September quarter compared with a revised 0.5% gain in the previous three months, according to data last Wednesday from the statistics office.
It cited fishing and aquaculture as the main drag.
The outcome is below the Norges Bank’ projection of a 0.4% increase as well as a 0.2% median gain forecast by analysts in a Bloomberg survey.
The data provides a somewhat dimmer view of this year’s rebound than seen previously in Norway – one of the richest countries on a per capita basis – after it trailed most of its euro-area peers in post-pandemic recovery.
Still, analysts pointed to one-time factors obscuring the positive trend.
“The weaker figure was largely driven by volatile components, including temporary shutdowns in manufacturing as well as lower activity in fishing and aquaculture,” Karine Alsvik Nelson, senior economist in Norway at Svenska Handelsbanken AB, said in a note.
“The data suggest that Norges Bank will be able to lower rates further over time, even if the next cut is still some way off.”
Her colleague at Danske Bank A/S, Kristoffer Kjaer Lomholt said the figures “on balance make a Norges Bank rate cut in March more likely – even if the details were less “dovish” than the headlines.” Still, he suggested the revisions of past data indicated lower productivity, which would be “long-term negative” for the krone.
Traders in overnight swaps now price in 12 basis points of additional rate cuts by the March meeting and 16 basis points by May, largely unchanged from last Tuesday.
Norway’s central bank officials have signalled no rush to further lower borrowing costs after the two quarter-point interest-rate cuts delivered earlier this year, as price growth still remains high.
Last month, they reiterated an intention to reduce interest rates further from 4% “in the course of the coming year.”
At their decision in September, rate-setters pencilled in just one move annually over the next three years. — Bloomberg
