Norwegian mainland economy likely grew 0.6 pct sequentially in Q2, says Nordea Bank

The Norwegian mainland economic growth is expected to have remained solid in the second quarter. According to a Nordea Bank research report, the mainland GDP is expected to have expanded at 0.6 percent quarter-on-quarter rate in the June quarter, the same as in the first quarter. The upcoming employment figures would also be equally vital. The employment growth is expected at 0.2 percent sequentially, which is consistent with the trend and Norges Bank’s forecast, stated Nordea Bank.

Through 2016, mainland GDP growth picked up and ended at a healthy 0.6 percent sequentially in the first quarter. The drop in oil-related industries has decelerated considerably and that is mainly why growth has picked up. Moreover, growth in the remainder of the economy has risen slightly. All the indicators point to continued healthy growth in the second quarter.

Norges Bank sees capacity utilization as well below normal. For growth to be solid enough for the output gap to close, it is vital that the negative drag from the oil sector actually slowdown, stated Nordea Bank. The third quarter oil investment survey figures would therefore be important as well. The second quarter survey from the spring might actually indicate that investment next year would drop by as much as 7 percent, a sharper drop than this year.

Despite the second quarter survey, the Norges Bank projects a growth in oil investment by 1 percent next year. The third quarter survey might provide an indication of whether that was too optimistic or not, added Nordea Bank.

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