New figures from the National Accounts for 2023 show that GDP for Mainland Norway increased 0.7 per cent from 2022 to 2023, measured in constant prices.
– The economic development throughout the year were characterised by increased prices, higher interest rates and reduced household demand, says Head of National Accounts, Pål Sletten.
The development in the Norwegian economy from 2022 to 2023 were mixed. The overall picture is that growth has slowed due to weak development in domestic demand caused by interest rate hikes, higher prices and weak development in household real wages.
– Some industries have developed weaker than others. Falling demand for housing has pushed down activity in construction. Reduced consumption of goods has contributed to a decline in retail trade, says Pål Sletten.
Throughout 2023, prices have continued to rise, but the driving forces behind the price increase have changed. The gross product deflator measures the rise in prices for domestic value added. For Mainland Norway, it increased by 5.1 per cent from 2022 to 2023. The depreciation of the krone in 2023 contributed to the price of total imports rising 6.7 per cent.
Internationally exposed industries contributed considerably to the increase in the value-added deflator, particularly in relation to the fact that they constitute a smaller part of the Norwegian economy. In these industries, the rise in prices is largely determined in international markets. Power supply helped pull the deflator down in 2023, as opposed to in 2022, when it helped pull the deflator up significantly. On the other hand, the positive contribution from industries that do not compete abroad increased.
While prices rose in the mainland economy, oil and gas prices fell. Production was at about the same volume, but measured in current prices, value added within oil and gas extraction fell by just under 800 billion NOK.
Accrued annual wage growth is estimated at 5.3 per cent in 2023. This is lower than the rise in consumer prices, and 2023 was thus the second consecutive year of real wage decline.
Operating profits in the business sector is estimated to have increased further from 2022 to 2023, excluding electricity production. These figures are more uncertain than normal, due to large changes in prices for production and intermediate goods.
Since the Norwegian economy grew moderately through 2022, there was a positive carry-over into 2023. This contributed 0.8 percentage points to the annual growth in GDP for Mainland Norway from 2022 to 2023. At the same time, annual growth is dampened by an estimated 0.4 percentage points due to two fewer working days in 2023 than in 2022.
National accounts for the fourth quarter
In December, GDP for Mainland Norway fell 0.1 per cent and increased 0.2 per cent in the fourth quarter. Several industries contributed to the increase in the quarter, including financial and insurance activities and health and care services.
Construction, production of electricity and distribution and trade in electricity fell, pulling down Mainland GDP Norway 0.3 percentage points.
Industries
Service industries, including dwelling services, increased 0.4 per cent in the fourth quarter. Increased activity in professional, scientific and technical activities, as well as financial and insurance activities, contributed to the growth. Administrative and support service activities fell and dampened the growth.
Other goods production, which includes primary industries, electricity production and construction, fell 1.8 per cent in the last quarter of the year. The decline is due to a decrease in construction and electricity production. Increased activity in the primary industries dampened the decline.
Gross product in manufacturing and mining decreased 0.1 per cent in the fourth quarter. The decline was mainly due to the production of basic pharmaceutical products and pharmaceutical preparations, as well as manufacture of food products.
Gross product in public administration increased 0.6 per cent in the fourth quarter, adjusted for seasonal and calendar effects and at constant prices. Central government had an increase of 0.7 per cent, while local government had an increase of 0,6 per cent.
Measured in constant prices, gross product in the extraction of oil and natural gas including services increased 6.1 per cent. The growth is due to an increase in gas production after shutdowns due to maintenance in the third quarter.
Consumption
Overall, household consumption increased 5.9 per cent, measured in current prices in 2023. Overall, the growth in consumption was due to higher prices.
In the fourth quarter, household consumption increased 0.7 per cent, measured in constant prices. Consumption of goods increased 2 per cent, mainly due to increased consumption of electricity. Service consumption developed weakly through the quarter and increased by only 0.1 per cent.
Norwegians' consumption abroad increased 1 per cent, and foreigners' consumption increased 10.2 per cent in the fourth quarter.
Total consumption in general government increased 3.6 per cent from 2022 to 2023. In the fourth quarter, consumption in general government increased 1 per cent. There was an increase in both central government and local government, 1.2 per cent and 0.8 per cent, respectively.
Investments
Gross investments for Mainland Norway fell 0.8 per cent in the fourth quarter. The largest negative contribution came from investments in other services. At the same time, investments in manufacturing, mining and quarrying and general government increased, which dampened the decline. Investments in dwellings fell 5.6 per cent. Overall, gross investment in Mainland Norway fell 0.8 per cent from 2022 to 2023.
Exports and imports
Norway's trade balance is estimated to 755 billion NOK in 2023, measured in current prices. Total exports are estimated to 2 420 billion, while imports are estimated to 1 665 billion. The trade balance has more than halved from its record high level in 2022. Nevertheless, it is the second highest surplus measured by the national accounts.
Total exports fell 23.7 per cent and the entire decline was due to a price fall of natural gas and crude oil. Measured in constant prices, exports rose 1.4 per cent, while imports increased 0.8 per cent.
In the fourth quarter, exports increased 3.3 per cent, measured in constant prices and adjusted for normal seasonal variations. The increase was mainly driven by crude oil and natural gas, but also service exports. Measured in current prices, exports increased 10.4 per cent from the third to the fourth quarter.
Total imports fell 0.7 per cent, measured in constant prices. Traditional goods, ships, platforms and aircraft, as well as crude oil and natural gas fell. Imports of services increased and dampened the decline.
The trade balance in the fourth quarter is calculated to 165 billion NOK and declined 133 billion compared to the same quarter the previous year.
Employment
Employment increased 0.1 per cent in the fourth quarter, adjusted for normal seasonal variations. Local government, education, as well as care services contributed the most to the increase.
The number of hours worked increased 0.3 per cent. In 2023 employment increased 1.3 per cent. Accrued annual wage growth was 5.3 per cent in 2023.
Revisions
In connection with new monthly and quarterly figures, retroactive revisions will occur. New information is occasionally incorporated in the calculation of selected national accounts figures. In addition, the seasonal pattern will change as new periods are added.
The major changes in the Norwegian economy during the COVID-19 pandemic may have led to relationships between indicators and accounting figures being different than in normal periods. The quarterly figures in 2022 and 2023 must therefore be regarded as more uncertain than usual. In the aftermath of the corona pandemic, revisions in the seasonal patterns have occasionally been larger than normal.