Economic Survey 3-2003

Output in the Norwegian economy, as measured by GDP, has fallen over the past year. The decline continued in the first quarter of 2003, albeit at a slower pace than earlier. On the other hand, the decline in mainland GDP appears to have levelled off. The decline in output reflects both reduced resource-based production (oil and electricity production) and a clear fall in manufacturing output. The fall in electricity production is temporary and production is expected to be higher this winter than last winter. However, the decline in manufacturing output is ascribable to many factors, not least the deterioration in cost competitiveness. Competitiveness has improved somewhat as a result of a weaker krone. Moderate inflation and wage growth ahead, combined with a steady krone exchange rate and the projected cyclical turnaround abroad, will probably reverse the trend in the manufacturing sector.