The Regional Network indicates towards continued strong growth in Norway. Growth will decelerate slightly, but if anything, less than in Norges Bank’s forecast. Norges Bank published its third quarter Regional Network report. The main indicator was 1.48 which suggests a quarterly growth at 0.7 percent to 0.8 percent, which is close to Norges Bank’s forecast at 0.7 percent. The forward-looking indicator is 1.35 which indicates growth at 0.7 percent the next six months.
Growth is usually solid in all parts of the economy except the usual suspect; the retail sector. No surprise, oil delivering industries are especially solid, but strong growth in the service sector also indicates the solid momentum in the economy.
The forward-looking indicator points to slightly softer growth looking ahead. Growth is likely to decelerate in the oil delivering sector, but from very solid levels. Additionally, the export industries and the retail sectors expect slightly slower growth.
“It is important to note that growth at 0.7 percent is way above trend growth and implies a tighter labour market looking ahead. Even more important, Norges Bank’s forecast points to a stronger slowdown than the Regional Network report indicates”, said Nordea Bank.
Quarterly growth is likely to decelerate to 0.5 percent to reach Norges Bank’s 2020 forecast while the network indicates 0.7 percent the next six months. There are no clear and solid signals that weaker growth abroad hits the domestic economy. Oil investment is not going to grow as much next year as this year.
“All in all, today`s Regional Network is very close to Norges Bank’s forecast. The report points to a slowdown but if anything, not as strong a slowdown as expected by Norges Bank. The report gives no reason for strong concern that the international unrest hits the domestic economy. Hence, Norges Bank will hike in September”, added Nordea Bank.