Norway’s economic growth accelerated in the first quarter as near-record low interest rates boosted consumer spending.
Gross domestic product, excluding oil, gas and shipping, grew 0.7 percent, after expanding a revised 0.2 percent the prior quarter, Oslo-based Statistics Norway said today. Growth missed the 0.8 percent median estimate of 11 economists in a Bloomberg survey. Total economic output shrank 0.2 percent, compared with a 0.3 percent growth estimate.
Norway’s central bank kept its benchmark interest rate at 1.5 percent last week, refraining from joining central banks from Poland to Australia in easing policy to boost growth and ease pressure on their currencies. Policy makers in western Europe’s second-richest nation per capita have held the bank’s benchmark unchanged for more than a year to avoid gains in the krone, which has emerged as a haven from the euro crisis.
Cheap loans have fueled private borrowing and boosted house prices to record levels, putting pressure on Norges Bank to raise rates to prevent a housing bubble. While wage increases are boosting consumer spending, krone gains are hurting exporters already suffering from weaker demand from its debt-stricken trading partners.
A rally in the currency, which hit a record on a trade-weighted basis in February, has pushed inflation well below the central bank’s 2.5 percent target, prompting policy makers to hint at a possible rate cut next month.
In Europe, Germany’s economy expanded less than forecast in the first quarter and France’s slipped into recession, according to data released yesterday.
Norges Bank predicts Norway’s mainland economy will grow 2.75 percent this year and 3 percent next year. That compares with an economic contraction of 0.5 percent in the 17-nation region this year, according to European Central Bank forecasts.
To contact the reporter on this story: Josiane Kremer in Oslo at Jkremer4@bloomberg.net
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