Weaker balance of payments puts brake on GDP growth

According to preliminary figures, Norway's gross domestic product (GDP) increased an average of 2.5 per cent in volume in the first three quarters of 1998, compared with the corresponding period the year before. Combined domestic application in the form of gross fixed investment and consumption rose by 5.2 per cent. The export surplus was, however, sharply reduced compared with last year, thereby negatively impacting GDP growth.

Consumption in households and non-profit organizations increased by 4.7 per cent from third quarter last year to third quarter this year. Goods consumption increased the most, by 6.4 per cent. Consumption of services grew more slowly at 3.4 per cent. Personal consumption, which is the total household consumption and individual consumption in general government, increased by 4.3 per cent. Seasonally adjusted figures show that the consumption in households and non-profit organizations was 1.4 per cent higher in the third quarter compared with the second quarter of last year. Growth in the two previous quarters was 0.5 and 1.8 per cent respectively.

In general government, consumption measured by volume was 2.4 per cent higher in third quarter 1998 than in third quarter 1997. Consumption in the civilian part of public administration increased by 2.6 per cent, while defence consumption was reduced by 0.3 per cent. Local government consumption rose 2.8 per cent.

Lower mainland investments

In petroleum activities, the volume of gross fixed capital formation increased by all of 36.8 per cent from third quarter 1997 to third quarter this year, while investments in Mainland Norway declined by 1.7 per cent. Both general government and mainland industries saw an overall decline in investments. On the other hand, investments in manufacturing, mining and quarrying were up. The surge in manufacturing investments must, however, be viewed in the light of the relatively low level of investments in third quarter last year. After making seasonal adjustments, total gross fixed capital formation increased by 1.3 per cent from the second to the third quarter of this year. Seasonally adjusted figures for mainland investments show, however, a decline of 1.3 per cent during the same period.

Weaker balance of payments

Norway's external trade in goods and services yielded a deficit of NOK 644 million in third quarter 1998. In the first and second quarter there was a surplus of NOK 11.3 and 3.8 billion respectively. Compared with third quarter 1997 exports dropped 2.7 per cent in volume. Exports of crude oil, natural gas, ships, platforms, and services declined, while traditional exports of goods increased by 1.5 per cent. The volume of imports increased by 5.2 per cent overall because of higher imports of both traditional goods and services. Omitting normal seasonal variations, the preliminary figures show a 2.3 per cent reduction in the export volume from second to third quarter 1998, and a 0.5 per cent growth in imports.

The income and current transfers balance for third quarter 1998 shows a deficit of NOK 3.5 billion. The current account balance in third quarter 1998 was negative at NOK 4.1 billion. The current account surplus totals NOK 3.9 billion so far this year. The surplus during the same period last year was NOK 47 billion.

Growth in industrial output

In third quarter 1998 the production volume in Mainland Norway was 3.1 per cent above third quarter 1997. The production volume in manufacturing increased by 2.5 per cent, while there was a decline in the primary industries. Production in the service industries increased 3.5 per cent and public administration also saw an overall volume increase of 1.8 per cent compared to the same quarter the year before.

Compared with the previous quarter, production in Mainland Norway increased by 0.7 per cent in third quarter 1998, after corrections for normal seasonal variations. The seasonally adjusted volume growth in industrial production was 1.0 per cent, while there was a decline in both petroleum activities and overseas shipping. In other service industries, seasonally adjusted production increased from the second to the third quarter, with the exception of financial and business services.

The national accounts show a two per cent increase in the number of employed persons from third quarter 1997 to third quarter 1998. The strong growth in business services in the first and second quarter has continued into the third quarter, while the growth in building and construction is somewhat lower compared to the previous quarters. Industrial employment in third quarter 1998 declined both compared to third quarter last year and second quarter this year.

New Statistics
Quarterly national accounts, 3rd quarter 1998.
The statistics are published quarterly in the Weekly Bulletin of Statistics, Economic Analyses 9/98 and Official Statistics of Norway (NOS) National Statistics of Accounts 1990-1997: Production, application and employment. For more information contact: Kristian.Gimming@ssb.no, tel. +47 21 09 44 17, Pia.Tonjum@ssb.no, tel. +47 21 09 48 34, or Tore.Halvorsen@ssb.no, tel. +47 21 09 48 48.

Weekly Bulletin issue no. 49, 1998