Preliminary figures show a 6.4 per cent decline in Mainland GDP for March
The Norwegian economy came to a halt in the second half of March 2020. Preliminary figures from the National Accounts show a 6.4 per cent fall in mainland GDP in March, adjusted for normal seasonal variations. This translates to a 1.9 per cent decline in Q1 2020.
The shutdown of economic activity in March, due to the Corona-epidemic, has no historical parallels. It differs from previous cyclical setbacks and financial crises in that parts of economic life have been suspended following advice or orders from the health authorities, or because the population seeks to protect itself against illness. This has resulted in wide-ranging effects, concurrent with the Norwegian economy being affected by similar developments in many other countries, with large impacts on prices of commodities and the exchange rate on Norwegian currency.
There is a great need for a comprehensive picture of the Corona-virus’ effect on economic activity. Statistics Norway is therefore already now presenting preliminary national accounts for the Q1 and March 2020. Estimates for the activity level at the end of March were published before Easter. Full national accounts for Q1 and March will be published on May 12, 2020.
These estimates are preliminary and based on the information available as of April 21, 2020. Since fewer indicators than normal are available, the figures are uncertain. However, this is of less significance compared to the uncertainty created by the highly unusual situation in March 2020.
Figure 1. Gross domestic product Mainland Norway. Constant 2017-prices. Monthly. Change in volume from the previous period (per cent)
|Gross domestic product Mainland Norway|
Production and Gross Domestic Product
The sharp decline in mainland GDP was unevenly distributed among industries and particularly strong for industries where infection control measures led to cessation of activity. This affected several service industries, reflected in a strong decline for arts, entertainment and other services and an even stronger decline in accommodation and food service activities (respectively down 27 and 30 per cent in March). Travel restrictions caused transport activities excluding ocean transport to fall markedly. This was partly due to a near complete stop of passenger traffic by air. The decline also affected retail trade, and both professional, scientific and technical activities and Administrative and support service activities were affected by the general setback in March.
Kindergartens were closed from March 12th. The production of private and municipal daycare services thus almost completely ceased. There was also a marked decline in activity in the health industry as hospitals postponed consultations and operations to free up capacity for corona patients, patients or therapists was quarantined and as patients themselves postponed treatment.
The preliminary figures show a decline in manufacturing of just over 3 per cent in March, resulting in a Q1 decline of 1.4 per cent. There are clear differences between the various manufacturing industries. Manufacture of food and beverage products grew more than 6 per cent in March. On the other hand, the industries closely linked to petroleum activities declined sharply.
Oil production was not significantly affected by the corona virus in the first quarter. Extraction of oil and gas increased 1 per cent compared to the 4th quarter of 2019. Total GDP for Norway, including petroleum activities, pipeline transport and ocean transport, fell 5.5 per cent in March and 1.5 per cent in Q1.
Household consumption is estimated to have decreased about 12 per cent from February to March. The decline in service consumption was 13 per cent. In total, service consumption fell 4 percent in Q1. Consumption of goods fell significantly less than service consumption, with a decline of 5 per cent in March and 2 per cent in Q1 as a whole.
Travel restrictions led to household purchases abroad falling by more than 50 per cent in March, reducing household consumption by 3 percentage points. In contrast, foreigners' consumption in Norway also fell.
Government consumption is estimated to have fallen about 4 per cent in March. From Q4 2019 to Q1 2020, public administration consumption remained unchanged.
At this time, only limited information is available on gross investments in fixed capital. The preliminary figures utilize planned investments for in oil and gas extraction, industry and power supply, adjusted downwards based on historical change between estimated and made investments. Real estate investment data are available up to and including March, but are uncertain. Gross fixed capital formation is projected to fall 2.5 per cent in March and 6 per cent in Q1.
Imports and Exports
Exports of goods and services fell by 1.8 per cent in March. Services largely contributed to the decline. Exports of traditional goods fell by 2.6 per cent in March and 3.5 per cent in Q1. Imports of traditional goods fell by 4.3 per cent in March, partly due to low imports of machinery and passenger cars. Overall, imports fell by around 11 per cent from February to March.
Figure 2. Selected industries. Constant 2017-prices. March 2020. Change in volume from the previous period (per cent)
|Professional, scientific and technical activities||-3.9|
|Wholesale and retail trade||-4.2|
|Fishing and aquaculture||-5.4|
|Gross domestic product Mainland Norway||-6.4|
|Administrative and support service activities||-6.9|
|Health and social work||-13.6|
|Transport activities excl. ocean transport||-25|
|Arts, entertainment and other scervce activities||-27.3|
|Accommodation and food service activities||-29.9|