New figures from the National Accounts show that GDP Mainland Norway increased by 0.2 percent from the fourth quarter of 2023 to the first quarter of 2024, seasonally and calendar adjusted and measured in constant prices. This is lower than the usual growth in the Norwegian economy. Household consumption fell by 0.7 percent, driven down by a sharp decline in household purchases of motor vehicles.
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During the last year, price and interest rate increases have led to weak development in household consumption, a fall in investments in dwellings, and a slowdown in the Norwegian economy. Analysts continue to see this development in the first quarter of 2024, says Pål Sletten, head of the division of National Accounts at Statistics Norway.
Gross fixed capital formation in the mainland economy have remained relatively high over the last year but fell sharply in the first quarter of 2024, also outside of housing. Admittedly, there is some random variation in industries' gross fixed capital formation, and the figures are uncertain.
Despite slow economic development, employment has remained high and grown steadily. Preliminary figures show that the rate of employment and hours worked grew by 0.3 and 0.5 percent respectively in the first quarter of 2024.
Continued growth in the labour market in combination with weak economic growth can indicate that productivity growth is low, measured as value added per hour worked.
Productivity has developed slowly after the pandemic, both in Norway and in many other countries. However, it is important to emphasize that productivity figures in the preliminary national accounts are uncertain, says Pål Sletten.
Favourable market conditions and beneficial tax provisions have contributed to high investment activity on the Norwegian continental shelf for over a year now. This has increased the activity in mainland industries that supply goods and services to the oil and gas operations.
A decline in goods consumption is related to many product groups, but a sharp fall in purchases of motor vehicles contributed the most. Excluding cars, the decrease in goods consumption would have been 0.8 percent.
As prices and interest rates have increased, households have become more cautious about purchasing durable goods, particularly cars. The further decline in car purchases in the first quarter indicates that households are still delaying significant acquisitions.
Direct purchases abroad by resident households increased by 4.2 percent and accounted for the largest positive contribution to household consumption in the first quarter. Direct purchases by non-residential households in Norway also grew by 3.1 percent.
Overall, prices in the Norwegian economy grew by 1.1 percent in the first quarter, measured by the gross product implicit price index for Mainland Norway. This resulted in GDP Mainland Norway growing by 1.2 percent, measured in current prices.
More information:
Statistics Norway
www.ssb.no