January 31, 2023

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November – Norwegian economy boosted by car purchases in E24

Norges Bank’s chief economist says stronger-than-expected economic growth clearly points to a new rate hike in the first quarter.

The mainland economy is expected to moderate significantly in 2023 compared to last year.
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GDPGDPGross Domestic Product (GDP) is equal to the sum of all goods and services produced in a country, minus the goods and services used in production. Norway’s mainland rose 0.2 percent in November, in line with economists’ expectations. Statistics Statistics Norway.

At the same time, the previous month’s growth was revised up to 0.1 percent from the zero growth reported earlier.

Buying a car in particular is driving growth this month.

– Retail trade excluding motor vehicles rose slightly in November, but strong growth in car purchases meant that the overall goods trade sector grew relatively strongly, says SSB’s Pål Sletten.

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Filmport sometimes happens in bulk in larger distributions. Although the purchase may have taken place earlier, the delivery is recorded in the GDP statistics only when it arrives.

– The big increase in car purchases we see in October and November is due to production problems and delays earlier this year and the increase in car taxes from January 2023, Sletten adds.

Traditional fishing and power sector activity also contributed to growth in the landscape, while sharp decline in the chemical and pharmaceutical industry slowed it down due to shutdown of some units.

– Very stable growth

GDP figures fluctuate a lot from month to month, so it’s common to see growth in the last three months. From June-August to September-November, Norway’s GDP grew by 1.0 percent.

– Many big impacts in November caused a lot of month-to-month volatility. “If you look at the three-month growth in GDP Mainland-Norway, some of these results have leveled off and we see that the economy has grown more sustainably recently,” Sletten says.

Total GDP, including oil and gas, rose 0.2 percent in November, from a 0.8 percent fall in October.

– clearly points to a new interest rate hike

The economy is expected to grow significantly weaker this year than last year as Norges Bank tightens with a series of interest rate hikes to tackle unusually high inflation.

Norges Bank has announced a further hike in interest rates from the current 2.75 per cent in the first quarter, taking the peak to 3 per cent this time. However, this is conditional on the economy growing in line with expectations.

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The central bank had expected somewhat weaker growth in November, with a 0.2 percent drop.

Marius Hov, Handelsbanken’s chief economist, did not want to make an “excessively large number” as GDP growth was slightly stronger than Norges Bank’s expectations.

– but the basic picture is that activity continues upwards
He writes in an opinion that unemployment is lower than previously assumed by Norges Bank.

– All in all, the figures clearly point towards a new interest rate hike in the first quarter. But we are talking about March. Norges Bank is expected to keep interest rates steady next week.

Statistics Norway can be found here: National accounts