Declining growth rate for mainland GDP through Q3

Following a sharp fall in activity in the Norwegian economy in March and April, activity picked up in the following months. The easing of infection control measures resulted in strong growth in May and June, according to new figures from the National accounts. The monthly growth rate then slowed through Q3.

- In September, just over half of the decline since February was recovered, with an activity level close to 3 per cent lower than before the Covid-19 pandemic broke out. The strong growth in Q3 reflects this recovery, says head of the National Accounts at Statistics Norway, Pål Sletten.

Growth was strongest immediately after the most stringent infection control measures were relaxed. Throughout Q3, this effect was gradually exhausted. In September, many industries still had significantly lower production than before the pandemic hit Norway.

- This means that when infection rates increased again in October and infection control measures were tightened, the Norwegian economy was still far from a normal situation. In Q3, employment was 80,000 below pre-pandemic, Sletten continues.

Positive development for several industries

Behind the strong growth from Q2 to Q3 2020 is a positive development in almost all industries, see figure 3. Several of the service industries that experienced the sharpest decline in March and April, experienced the strongest recovery, but were also well below the level from February. Industries with weaker percentage declines at the beginning of the crisis, such as manufacturing, construction, and education did not see a corresponding percentage growth, but were all at or just below the activity level from February.

Extraction of crude petroleum and natural gas increased almost 2 per cent in Q3 and was about 5 per cent above the level from February. During the months in the third quarter, 55.2 million standard cubic meters of oil equivalents (MSm3 o.e.) were produced, which is just over 15 per cent above the level in the third quarter of 2019.

Total GDP for Norway, including oil and gas extraction, transport via pipelines and ocean transport, rose 0.6 per cent from August to September. Q3 saw a 4.6 per cent growth.

Consumption

Household consumption increased 1.6 per cent in September, giving an overall growth of 9.6 per cent in Q3. Consumption of goods grew 6 per cent in Q3 and was about 10 per cent higher than in the Q4 2019. Consumption of services saw a Q3 growth of 12.4 per cent, which reflects the gradual reopening of businesses in the second quarter, as well as further easing of restrictions in Q3.

Consumption in central government rose 3.3 per cent in Q3 after a fall of about 2 per cent in Q2. The recovery in the health industry explains most of the growth in Q3. Consumption in local government rose 2.6 per cent in Q3, driven by growth in the consumption of education and daycare services.

Investments

Gross investments for Mainland Norway have declined relatively steadily since the latter half of 2019. They declined further in Q3 and were thus 7.5 per cent lower than in the same quarter in 2019. The corona pandemic may have affected the willingness to invest in enterprises, but one must also see the decline in connection with the fact that there were large investments within manufacturing and electric power generation industries in 2019 and many of the projects have been completed. Housing investment has fallen since the beginning of 2017, and the steepest decline was in the second half of 2019. Throughout 2020, development has been relatively flat, with a decline of 1.5 per cent from the second to the third quarter.

Exports and imports

Total exports grew 1.9 per cent in September, primarily driven by increased exports of natural gas. In September, the level of exports of goods and services was just over 3 per cent lower than in February. Total exports rose by almost 5 per cent in Q3.

After strong growth throughout the summer, there was weak growth in imports of goods and services in September. Unlike exports, imports are a long way from recovering. The level of total imports in September was about 11 per cent below the level in February. For Q3, there was an increase in imports of goods and services of 10.3 per cent.

Employment

Total employment fell 0.4 per cent in Q3, adjusted for normal seasonal variation. The sharpest decline came in Q2 2020 and is now estimated at 2.5 per cent.

Revisions

In connection with new monthly figures, there will be recurring revisions. The statistics used will not normally change backwards, but seasonally adjusted series can still be affected. This is a consequence of the fact that the basis for seasonal adjustment changes when new periods are added. The National Accounts has recently published an article on revisions in the monthly national accounts.

Since the previous publication of monthly national accounts in October, the monthly and quarterly course for GDP mainland Norway is somewhat revised. The decline in Q1 2020 has been revised up from -2.2 percent to -2.1 percent and Q2 2020 has been revised up from -6.3 per cent to -6.0 per cent.