Norway’s mainland economy unlikely to have registered any growth in Q2

The Norwegian economy is likely to register zero growth in the second quarter of this year in sequential terms. The manufacturing production in Norway is still being impacted severely by lower demand from the oil sector. Moreover, both production index for electricity and construction declined in the second quarter of 2016.

There is not known much about production in services sectors; however, it is expected to pull up. But the scenario seems mixed, judging by Norges Bank’s regional network. Services to consumer were performing well, while growth was nearly zero in business to business services. Oil services are expected to have dropped robustly in line with the trend.

If the projections come true, the main picture would hold. Production in oil related sectors continue to shrink strongly, adversely impacting mainland growth. Robust growth in the remainder of the economy prevents growth from turning negative, said Nordea Bank in a research report. The drag from oil related sectors are expected to ease in the future and growth in the mainland will rise.

“We forecast mainland GDP growth at 0,0 percent q/q (0.2 percent y/y) in Q1 compared to 0.3 percent in Q1”, noted Nordea Bank.

Nordea Bank’s projection is 0.3 percentage points on the downside to the Norges Bank’s forecast.

“But taking into account that electricity production pull down close to 0.2% points in our forecast we judge the figure to have no significant impact on monetary policy if we are to be right”, added Nordea Bank.