Mainland Norway's GDP fell 4.7 percent in April
This follows a 6.9 per cent fall from February to March, and Mainland GDP was thus 11.3 per cent lower in April than in February. The underlying data indicates some increase in economic activity towards the end of the month.
Activity in the Norwegian economy fell abruptly after the introduction of infection control measures on March 12. The measures applied mainly throughout April. In the second half of the month kindergartens opened, and in the last week of April the schools opened grade 1-4. The restrictions on businesses with one-to-one interactions were also eased towards the end of the month, and the travel ban on holiday homes was lifted.
- There has been an unusually sharp decline in Mainland GDP in March and April, says head of National Accounts at Statistics Norway, Pål Sletten. The fall was somewhat smaller in April than in March, which is mainly due to a rise in commodity consumption, which in turn dampened the decline in retail trade. In addition, the gradual softening of infection control measures at the end of April increased activity in some industries.
- The fall in Mainland GDP is unevenly distributed among industries. The main picture is about the same as in March: Industries subject to infection control measures, particularly service industries, have more or less ceased activity and fell most significantly, says Sletten.
Figure 1. Gross domestic product and household final consumption expenditures. Rolling three-month sum. Seasonally adjusted. Volume indices. 2017=100
|Gross domestic product, Mainland-Norway||Household final consumption expenditures|
Figure 2. Gross domestic product and household final consumption expenditures. Monthly. Seasonally adjusted. Volume indices. 2017=100
|Gross domestic product, Mainland-Norway||Household final consumption expenditures|
The National Accounts show the development for whole months. However, a special analysis found that economic activity fell 14 percent from the first to the second half of March. This is well in line with Mainland GDP falling 6.9 per cent for March as a whole.
- If the level of activity at the end of March had continued through April, the fall from March to April would have been about the same, says Sletten.
Major decline in several service industries
Arts, entertainment and other services, as well as accommodation and food services, fell 43.3 and 41.9 per cent in April, respectively. Transport activities excl. ocean transport also fell sharply, down 23.5 percent from March to April. BankAxept transaction figures indicate a fairly strong rise in these industries through April. Administrative and support services fell 11.1 in April. Herein lies rental, leasing, travel agencies and tour operators, all of which are affected by both reduced activity in other industries and reduced demand from households.
Health and social work fell 9.9 percent in April, following a 13.4 percent decline in March. This industry alone reduced Mainland GDP by 2.5 percentage points from February to April, corresponding to NOK 6.3 billion. The hospitals have had to postpone a large number of appointments in order to ensure capacity.
Other service industries generally experience a somewhat smaller fall in April compared to the fall in March. Wholesale trade fell by 2.1 per cent from March to April. The trend is still affected by the decline in other industries, which is reflected in reduced wholesale trade. Professional, scientific and technical activities fall by 1.6 per cent in April.
Manufacturing and mining fell 2.9 percent in April after a 4.1 percent decline in March. Partly due to a strong rise in the production of some goods demanded by households, the food industry experienced solid growth of 6.7 per cent in March. In April, however, the industry saw a fall of 4.0 per cent. As the largest single Mainland manufacturing industry, it thus contributes to slowing down the development of total manufacturing production.
Industries related to petroleum activities are among the most weakly developing, where construction of oil platforms, as well as ship construction, fell 15.5 and 11.5 per cent in April, respectively. As in March, developments in the processing industries are mixed. Manufacturing of furniture and other industrial production accounted for the largest single contribution to the decline in manufacturing (down 29.6 per cent, following a fall of 14.8 per cent in March). The pharmaceutical industry fell marginally in April, down 0.4 percent from March. On the other hand, the production of chemical raw materials and products saw a growth of 9.7 and 10 per cent in April.
Extraction of crude oil and natural gas grew 0.2 per cent in April, from 2.1 per cent in March, according to preliminary estimates from the Norwegian Petroleum Directorate. Crude oil production increased, while natural gas production declined. Service activities incidental to oil and gas fell 8.9 percent in April, following a 6.7 percent drop in March.
Continued sharp decline in household service consumption
As a result of the corona pandemic and infection control measures, household consumption continued to fall in April, following a decline of 13.7 per cent in March. Overall, consumption fell 6.7 per cent in April, despite an increase in commodity consumption.
Household consumption was particularly curtailed by the purchase of services, which fell 12.4 per cent in April. Thus, service consumption fell from an already low level, after a decline of 15.7 per cent in March. Consumption of leisure services, kindergartens, personal services, hotel and restaurant services and passenger transport fell by between 24 and 60 per cent in April. The service consumption also includes household housing services, which have not been affected by the corona crisis.
Commodity consumption rose 2.5 per cent in April, following a 4.2 per cent fall in March. Thus, the decline in March was partially picked up in April. It should be seen in light of the fact that households and enterprises have gradually returned to a more normal consumption pattern. Purchases of clothing and footwear rose significantly after a sharp fall in March, but the growth was not strong enough to recover from the pre-corona pandemic level. Purchases of cars and petrol, on the other hand, fell further, by 6.8 per cent. The number of newly registered passenger cars has not been as low since February 2009. Consumption of food and beverages rose sharply in March and remained at about the same level in April.
Continuation of travel restrictions led to household purchases abroad falling by 88.7 per cent in April, reducing household consumption by 2.9 percentage points. In contrast, foreigners' consumption in Norway also fell.
Final consumption expenditure of general government fell 3.3 percent from March to April. This is a somewhat smaller decline than from February to March, when the fall was 3.8 per cent. The decline in activity in hospitals, kindergartens and cultural institutions is, as in March, the result of the negative development.
The decline in investment continued
Gross fixed capital formation fell 0.3 per cent in April after a decline of 1.7 per cent in March. The information base for the investments is limited and the figures are therefore more uncertain. Investments in oil and gas extraction, industry and power supply, as well as housing investment, are part of the monthly source, but for many other business areas the information is lacking. Investments are likely to continue to be somewhat more uncertain than usual due to the unusual situation we are in.
Export and import
Total exports fell 6.0 percent from March to April. As for March, the services, and especially the consumption of foreigners in Norway, contributed most to the decline. This is related to the travel restrictions due to the corona pandemic. Exports of traditional goods fell 4.3 per cent, partly driven by a fall in exports of refined petroleum products. Crude oil exports are moving in the opposite direction and are showing a rise for the third consecutive month.
Imports of goods and services fell 8.2 percent in April. The largest drop was in Norwegians' consumption abroad as a result of reduced travel traffic. Imports of traditional goods fell during the same period.
In connection with new monthly figures, there will be 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 the seasonal adjustment changes when new periods are added. The National Accounts recently published an article on the revisions in the monthly national accounts.