(Bloomberg) -- Norway’s economy expanded for a second quarter in a row at the end of last year, showing the Nordic nation remains somewhat more resilient to high prices and credit costs than the central bank has expected.
Mainland gross domestic product, which excludes fossil fuels and shipping, grew by 0.2% in the fourth quarter from the previous three months, according to a release from Statistics Norway published Wednesday. Economists surveyed by Bloomberg had expected a 0.1% gain while Norges Bank projected no change.
Norway’s oil and gas sector, bolstered by windfall gains following sanctions on Russia over its all-out invasion of Ukraine, has helped keep the economy buoyant even as consumers are pulling back spending much like in its regional peers. The krone’s depreciation in past two years has also benefited other exports, such as seafood.
Despite the marginal growth, the economy continues to be hit by a weak development in domestic demand amid interest-rate hikes and higher prices, the statistics office said.
“Falling demand for housing has pushed down activity in construction,” the agency’s head of national accounts, Pal Sletten said in the statement. “Reduced consumption of goods has contributed to a decline in retail trade.”
Norges Bank has deployed the longest tightening streak in the G-10 sphere of major currency holders, raising borrowing costs to 4.5% to tame price growth that’s still among the fastest in western Europe. It’s signaled no pivot to easing before autumn, which could make it the last central bank in the G-10 space to cut interest rates.
The Labor-led minority government still expects a soft landing for the economy which is “on track to a calmer place,” Finance Minister Trygve Slagsvold Vedum said in an interview on Tuesday, citing a strong labor market.
Read More: Norway’s Finance Minister Says Worry Over High Inflation Easing
Even so, the central bank has projected a contraction of 0.3% for the mainland economy in the current quarter and expects it to skirt a full-year recession by the smallest margin this year.
--With assistance from Joel Rinneby.
©2024 Bloomberg L.P.
Norway’s Economy Ends 2023 With Resilience to Rising Costs - BNN Bloomberg
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