Norway: Economy drops slightly in November on tighter restrictions
Economic output decreased 0.1% over the prior month in November in seasonally-adjusted terms, softening from the 0.7% drop in October. Meanwhile, the economy grew 1.2% in the rolling quarter of September–November relative to the previous quarter (June–August), slowing markedly from the 2.9% growth clocked in August–October.
Mainland GDP—which excludes hydrocarbon extraction and related transport—decreased 0.9% in November over the previous month, contrasting the 1.2% rise clocked in October. In the rolling quarter of September–November, the mainland economy expanded 2.2% from the previous rolling quarter, down from the 3.7% growth recorded in August–October.
The downturn in output in November was broad-based. Domestically, private consumption shrank 1.4% in November having grown 0.3% in October, while fixed investment also contracted (November: -2.2% mom; October: +0.9% mom). Meanwhile, government spending flatlined in November, having grown 1.0% in October. Externally, exports shrank 2.6% in November, contrasting the 1.5% rise in October, while imports rose 3.0% in November from 1.3% in the month prior.
November’s overall reading reflected a tightening of restrictions in both domestic and key international economies, as a result of surging Covid-19 infection rates at home and in the U.S. and EU. Increased domestic measures drove a sharp fall in services consumption, dragging household spending lower in the month, while weaker foreign demand weighed on the external sector. Looking forward, elevated infection rates throughout December will have likely weighed on output at the end of 2020, although vaccine plans began in earnest in January, boding well for an uptick in activity this year.
Regarding the outlook, Øystein Børsum, Jon Espen Riiser and Marlene Skjellet Granerud, economists at Swedbank, commented:
“The Norwegian economy has shown relatively high resilience during the crisis, and we expect a strong recovery in 2021. At present, the government has tightened restrictions in order to prevent a rising virus spread, even if the infection level remains relatively low. We expect these restrictions to largely remain in place and hold the economy back through the winter season. However, as spring sets in, we expect the domestic Norwegian economy to be in position for a strong rebound as the virus spread eases and the vulnerable parts of the population are vaccinated.”