Recent economic data reveals a setback for the Norwegian economy, with a decline of 0.4 percent in gross domestic product (GDP) for Mainland Norway in the month of April. The figures, published by the National Accounts, indicate a downward revision of growth in March from the previously estimated 0.5 percent to a newly estimated 0.2 percent. It’s important to note that all monthly figures are preliminary and subject to revision in subsequent reports.
Pål Sletten, Head of National Accounts, expressed concerns about the economic momentum of Norway. While the country experienced steady growth in certain periods of 2022, the recent months have seen a gradual decline, culminating in the April downturn.
The decline in April was not confined to a specific sector but was observed across various industries. Wholesale trade, retail, and construction were among the key contributors to the downturn. Additionally, consumption in households and non-profit organizations experienced a notable decline of 1.8 percent. This decline in consumption was mainly driven by a 3.3 percent drop in the consumption of goods, which is unusually large. Service consumption also saw a slight decrease. As a consequence of reduced consumption, income from value-added tax suffered, contributing to the overall decline in Mainland Norway’s GDP by 0.2 percentage points.
Sletten noted that the timing of Easter in April this year could have influenced the economic fluctuations, as it deviated from the patterns seen in regular months. While the effects of Easter were accounted for in the seasonal adjustment process, there remained more significant uncertainty regarding the core growth compared to other periods of the year.
Moreover, there are indications that the recent increase in interest rates and inflation is beginning to impact disposable income. The decline in April was particularly evident in sectors influenced by changes in household purchasing power.
These monthly figures should be interpreted with caution due to their volatility and the potential for revisions as more recent data becomes available. To gain a more comprehensive understanding of the economic situation, it is advisable to consider the figures over several months. The rolling three-month growth for Mainland Norway’s GDP from November to April stood at -0.1 percent.
The current decline in the Norwegian economy poses a challenge for policymakers and underscores the need for careful analysis and strategic interventions to address the slowdown and restore economic growth in the coming months.