Bloomberg News

Norwegian Economy Slows as Consumer Spending Growth Abates

November 29, 2011

(Updates with comment from premier in fourth paragraph, IMF in ninth.)

Nov. 22 (Bloomberg) -- Norway’s economy slowed in the third quarter as a threat to growth from Europe’s debt crisis damped consumer spending.

Gross domestic product, excluding oil, gas and shipping output, grew 0.8 percent in the third quarter after a revised 1.3 percent expansion in the period through June, Oslo-based Statistics Norway said today. That beat the 0.7 percent median estimate of 14 economists surveyed by Bloomberg. Overall, the economy grew 1.4 percent.

The failure of European leaders to end the debt crisis in the euro area is sapping growth in Norway, which sends more than 60 percent of its exports to the region. Central Bank Governor Oeystein Olsen has said he’s ready to cut rates if global prospects worsen, while Finance Minister Sigbjoern Johnsen has said the government is prepared to act if the crisis deepens.

“We still have low unemployment in Norway so the starting point is good but it can quickly change,” Prime Minister Jens Stoltenberg said at a press briefing. “We know from experience that it can change suddenly and strongly.”

The krone was little changed at 7.8197 per euro as of 11:47 a.m. in Oslo. It strengthened 0.3 percent to 5.777 per dollar.

Consumer Spending

Consumer spending rose 0.2 percent in the quarter, slowing from 0.8 percent growth in the second quarter. Exports gained 5.8 percent, led by increased shipments of natural gas, the statistics office said. Exports of “traditional goods” rose 0.7 percent while investments in mainland Norway fell 0.8 percent in the quarter.

Stoltenberg said today that the government may cut its economic forecast for 3.1 percent growth in 2012. “If growth in the U.S. and Europe has been adjusted down, it will influence Norwegian growth because we sell our paper, aluminum and salmon to those markets,” he told reporters in Oslo today.

Norway, the seventh-largest oil exporter, has been shielded from the worst of the debt crisis and boasts surpluses and unemployment below 3 percent.

Norway is “better placed” than most in Europe to weather an intensification of the euro area’s debt turmoil, the International Monetary Fund said in a report today. The country’s mainland economy, which excludes oil and shipping output, will grow “moderately” and is projected to expand about 2.5 percent in 2011 and 2012, the Washington-based group said in a report presented in Oslo.

ECB Recession?

The European Central Bank said the euro area may slip back into recession as governments implement tougher austerity measures to fight the debt crisis. Growth in Germany, the region’s largest economy, may slow to a near standstill next year, the Bundesbank said yesterday.

The ECB unexpectedly cut its benchmark rate by 0.25 percentage point this month to 1.25 percent. Norway’s central bank kept its overnight deposit rate at 2.25 percent in October. Policy makers next meet on Dec. 14 to decide on interest rates.

“The effects of the international downturn have also become visible in the Norwegian exports data,” said Bjoern- Roger Wilhelmsen, chief interest rates strategist at First Securities ASA in Oslo, in a note yesterday. “The value of non- energy exports is on a downward trend and Norges Bank’s forecast of 3 percent real growth in mainland-Norway next year already looks too optimistic,”

--Editors: Jonas Bergman, Tasneem Brogger

To contact the reporter on this story: Josiane Kremer in Oslo at

To contact the editor responsible for this story: Tasneem Brogger at

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