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Norwegian Economy Expands Faster than Anticipated in 2014

Norwegian Economy Expands Faster than Anticipated in 2014

Walker England, Kara Dailey,


Talking Points:

  • Industrial Production increased by 3.6% (y/y)
  • National Account increased by 2.2% (y/y) ; Mainland component increased by 2.3%
  • EURNOK trades in downward trending channel

Despite a dramatic slide in oil prices, the Norwegian economy expanded at a faster rate in 2014 than anticipated; industrial production increased by 3.6% (y/y) , contributing to the 2.2% rise in the National Account. Given this rise in GDP, Norway was subsequently able maintain a stable trade balance and employment rate throughout the year.

In contributing to the overall Production Index’s 3.6% rise, manufacturing output increased by 1.3% (m/m), 0.9% (q/q) and 3.3% (y/y). Specifically, from November to December, basic metals and machinery production increased by 1.8 and 2.5 percent respectively, while a 3.1% decrease in the volume of ships, boats and oil platforms was offsetting. Year-over-year, the growth was driven by increases in the mining/quarrying (+13.1%) and machinery/equipment (+13.3%) sectors. As a result, growth in Norway was greater than that of Europe (+0.3%) despite the country’s 2.2% decline in petroleum, chemical and pharmaceutical products.

Drawing on the increase in industrial production, GDP grew by 0.9% on the quarter and 2.2% on the year. Exclusive to the mainland, growth was only 0.5% in Q4 and 2.3% on the year. Petroleum activity was the single most important factor driving the growth; the industry progressed in all quarters with the largest movement (+2.5%) occurring in the final three months.

Trade also remained favorable with exports (+1.7%) increasing more than imports (+1.6%). Furthermore employment remained steady, increasing by 0.2%, while hours worked marginally rose to 0.3%.

In partially offsetting these component gains, gross capital formation decreased by 2.9% in the 4Q. The drop results from governments and households refraining from investing by a combined 6.8%.

EURNOK Daily Chart

dailyfx Euro Krone daily chart February 2015.

Chart Created by Walker England Using MarketScope2.0

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.