New figures from the National Acounts show that GDP Mainland Norway increased by 0.2 percent from the fourth quarter of 2023 to the first quarter of 2024, seasonally and calendar adjusted and measured in constant prices. This is lower than the usual growth in the Norwegian economy. Household consumption fell by 0.7 percent, driven down by a sharp decline in household purchases of motor vehicles.
– During the last year, price and interest rate increases have led to weak development in household consumption, a fall in investments in dwellings, and a slowdown in the Norwegian economy. We continue to see this development in the first quarter of 2024, says Pål Sletten, head of the division of National Accounts at Statistics Norway.
Gross fixed capital formation in the mainland economy have remained relatively high over the last year but fell sharply in the first quarter of 2024, also outside of housing. Admittedly, there is some random variation in industries' gross fixed capital formation, and the figures are uncertain.
– For example the initiation and completion of major projects can cause significant fluctuations in gross fixed capital formation. Moreover, the underlying data for gross fixed capital formation is somewhat limited for many sectors in the preliminary national accounts. Therefore, the fall in the first quarter must be interpreted with caution, says Sletten.
Despite slow economic development, employment has remained high and grown steadily. Preliminary figures show that the rate of employment and hours worked grew by 0.3 and 0.5 percent respectively in the first quarter of 2024.
Continued growth in the labor market in combination with weak economic growth can indicate that productivity growth is low, measured as value added per hour worked.
– Productivity has developed slowly after the pandemic, both in Norway and in many other countries. However, it is important to emphasize that productivity figures in the preliminary national accounts are uncertain, says Pål Sletten.
Growth in Oil-related Manufacturing and Service Provisioning
An increase in the value added in manufacturing and service industries supplying the oil sector contributed to growth in GDP Mainland Norway in the first quarter. This was particularly true for industries such as the building of ships, oil platforms and modules, production of metal goods, and service activities incidental to oil and gas.
– Favourable market conditions and beneficial tax provisions have contributed to high investment activity on the Norwegian continental shelf for over a year now. This has increased the activity in mainland industries that supply goods and services to the oil and gas operations, says Sletten.
In addition to the oil-related industries, increased activity in health and social work and wholesale, retail trade and repair of motor vehicles made significant contributions to the quarterly growth in the mainland economy.
Decline in aquaculture and Construction
A reduction of value added in fishing and aquaculture significantly dragged down growth in GDP Mainland Norway in the first quarter. This was due to a decline in the aquaculture industry, which can be seen in connection with disease and other challenges.
With a decline also in the first quarter of 2024, the gross product in construction has been down for four quarters in a row. Household investments in dwellings, which dropped sharply in 2023, declined further by 5.8 percent in the first quarter of 2024.
– The decline in the construction and building industry is related to the sharp drop in the households’ gross fixed capital formation in dwelling services over the last year. This has pulled down activity in home construction, says Pål Sletten.
Decline in Household Car Purchases
Household final consumption expenditure fell 0.7 percent from the fourth quarter of 2023 to the first quarter of 2024. Goods consumption dropped by 2.2 percent, while service consumption increased by 0.2 percent.
The decline in goods consumption was related to many product groups, but a sharp fall in purchases of motor vehicles contributed the most. Excluding cars, the decrease in goods consumption would have been 0.8 percent.
– As prices and interest rates have increased, households have become more cautious about purchasing durable goods, particularly cars. The further decline in car purchases in the first quarter indicates that households are still delaying significant acquisitions, according to Pål Sletten.
Direct purchases abroad by resident households increased by 4.2 percent and accounted for the largest positive contribution to household consumption in the first quarter. Direct purchases by non-residential households in Norway also grew by 3.1 percent.
Continued Growth in Domestic Prices
Overall, prices in the Norwegian economy grew by 1.1 percent in the first quarter, measured by the gross product implicit price index for Mainland Norway. This resulted in GDP Mainland Norway growing by 1.2 percent, measured in current prices.
Seasonally adjusted quarterly growth in electricity prices made a significant contribution to domestic price inflation. This must be viewed in connection with the relatively low electricity prices in the previous two quarters.
While prices rose in the mainland economy, prices of oil and gas fell in the first quarter. This led to a decrease in total GDP and exports by respectively 1.5 and 5.5 percent, measured in current prices.
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.
In certain areas there is incorporated new base statistics for figures in 2023, but annual growth in GDP Mainland Norway in 2023 remains as previously published February 14th.
In the general government annual growth in value added is revised up 0.1 percentage points, while the growth in general government consumption is revised down 0.3 percentage points. Total gross fixed capital formation is revised down from an annual growth of 0.3 percent to 0.0 percent in 2023.
Since the last monthly publication of the National Accounts April 11th, monthly growth rates in GDP Mainland Norway are revised down 0.1 and 0.3 percentage points in January and February respectively.