(Bloomberg) -- The Norwegian economy recorded a third consecutive quarter of expansion, as a recovery in purchasing power bolstered car purchases and a weak krone underpinned exports.
Mainland gross domestic product, which excludes offshore energy industry and shipping, grew by 0.1% in the second quarter from the previous three months, according to a release from Statistics Norway published Thursday. First-quarter growth was revised lower to 0.1%.
Thursday’s reading was just below the 0.2% growth estimated by both the central bank and economists in a Bloomberg survey.
The outcome shows the energy-rich Nordic nation is dented more than previously assumed by the fallout from interest rates at a 15-year high, even as the slowing inflation and wage growth above 5% fuel consumption.
The weaker-than-forecast figures, together with revision of earlier data, may still increase the odds of Norges Bank reducing borrowing costs before next year. The Norwegian policymakers have kept delaying monetary easing as one of the most aggressively hawkish in the rich world, forecasting no change “for some time ahead” at their meeting last week.
“Negative revisions clearly leave a picture of a weaker mainland economy than Norges Bank projected back in June,” said Kristoffer Kjaer Lomholt, head of FX and corporate research at Danske Bank A/S. “All in all, a report that should keep the door open for a December cut.”
Household consumption grew by 1.6% on quarter due to a “strong upswing” in car purchases, the statistics office said, while noting the figures for the sector can fluctuate “widely.” Trade and power supply also helped boost mainland growth, it said.
The krone is hovering near four-year lows, helping demand for Norwegian exports, as well as its tourism sector. It was little changed following the report, trading 0.1% lower at 11.7233 versus the euro at 8:50 a.m. in Oslo.
Total exports grew 5.6% on quarter, the fastest increase in almost two years, as oil and gas shipments were less affected by maintenance works that are usual for the season.
The country’s largest lender, DNB Bank ASA, on Wednesday kept its forecast for full-year growth of 0.8% in 2024 and projected next year’s growth at 1.6%, largely due to higher purchasing power of consumers. That compares with Norges Bank’s estimates of expansion of 0.8% and 1.3%, respectively, published in June.
Analysts at DNB and Svenska Handelsbanken AB said the deviation from the central bank’s estimates was too small to clearly affect policymakers’ rate outlook.
--With assistance from Joel Rinneby.
(Updates with analyst comment, market reaction from fourth paragraph.)
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