The decline in the Norwegian economy in the second quarter was the deepest ever recorded

Activity in the Norwegian economy fell sharply after the introduction of infection control measures on 12 March. Mainland Norway's GDP fell 7.3 per cent in March and another 4.1 per cent in April. The decline was particularly strong in many service industries.

Following a gradual reopening of society, activity increased markedly in May and June. The largest contribution to the June growth came from health and social work. This is mainly due to activity in the hospitals returning to normal levels.

Administrative and support service activities, accommodation and food service activities, arts, entertainment and other service activities, as well as transport activities excl. ocean transport also contributed to the growth towards the end of the second quarter.

Quarterly national accounts are available back to 1978. The largest fall in a single quarter before the corona pandemic was during the financial crisis. In the fourth quarter of 2008, gross domestic product fell 2.3 per cent. The third largest fall was in the first quarter of 2020.

- After a dramatic decline in activity in March and April, the mainland economy in June was less than halfway back from the bottom. Thus, the second quarter was almost three times as bad as the worst quarter during the financial crisis, says head of the National Accounts at Statistics Norway, Pål Sletten.

Developments in the Scandinavian countries have been relatively similar.

- There are some differences in whether the decline came in the first or second quarter of 2020, but the overall decline since the fourth quarter of 2019 is of the same magnitude in Norway, Sweden and Denmark, says Sletten. Sweden stands out in that GDP did not fall in the first quarter, but rather fell more sharply in the second quarter.

- The uncertainty is greater than usual, he adds. We have had to use new data sources to capture unusual changes in the Norwegian economy. The figures can be revised as we get a better data base.

 

Consumption

Household consumption grew almost 9 per cent in June, after rising about 5 per cent in May. In the second quarter, the decline in household consumption was 10.3 per cent, despite an increase in consumption of goods. Consumption in general government rose 1.3 per cent in June and fell just over 2 per cent in the second quarter.

Investments

Gross fixed capital formation fell just under 2 per cent in June and just over 3 per cent in the second quarter. Housing investment and public investment dampened the quarterly decline.

Exports and imports

Exports of goods and services increased about 2 per cent in June. The upturn was driven, among other things, by increased exports of natural gas and metals. For the second quarter total, exports fell close to 9 per cent, mainly reduced by foreigners' consumption in Norway.

Imports of traditional goods increased about 10 per cent in June. Strong growth in the import of vehicles pulled up the growth. Total imports increased about 7 per cent, although there was a decrease of 17 per cent in the second quarter. As with exports, quarterly growth is being sharply reduced by reduced travel activity.

Employment

Total employment decreased 1.3 per cent from the first to the second quarter, according to seasonally adjusted figures from the National Accounts.

The reporting to a-ordningen has been good during the corona pandemic. However, there is slightly lower reporting than before. There also appears to be a somewhat larger element of the missing start and end dates for temporary lay-offs. Similar challenges may also apply to end dates for employment that has in fact ended. These conditions may help to explain a somewhat larger gap between the statistics in the second quarter of 2020.

The national accounts figures lie between two source statistics (see box) after correction for differences in definition and population delimitation. The uncertainty in the figures is greater than normal. This means that changes must be interpreted with caution.

Revisions

In connection with new monthly figures, there will be recurring 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 seasonal adjustment changes when new periods are added. The National Accounts has recently published an article on revisions in the monthly national accounts.