Norway’s economy stagnated after a year of growth, faced with weaker consumption and showing the fossil-fuel rich Nordic nation is finally feeling the pinch of higher inflation and rising borrowing costs.
(Bloomberg) — Norway’s economy stagnated after a year of growth, faced with weaker consumption and showing the fossil-fuel rich Nordic nation is finally feeling the pinch of higher inflation and rising borrowing costs.
Mainland gross domestic product, which excludes Norway’s offshore industry, was unchanged from the previous three months, when it grew 0.2%, the statistics office said on Tuesday. Analysts surveyed by Bloomberg had projected an increase of 0.1%, the same as Norges Bank’s forecast from June.
The Nordic nation has so far been more resilient than most of its regional peers to fallout from lower purchasing power and surging credit costs. The data may cool market speculation that Norges Bank is poised to extend its interest-rate hikes beyond next month, when economists expect the key rate to rise to 4.25%.
Last quarter, construction had the biggest negative impact on GDP, the office said, with housing investments falling. Apart from car purchases, which were exceptionally low in the first quarter, household consumption fell in the second quarter, it added.
The mainland economy will grow 1.2% for the full year and 0.2% in 2024, the central bank forecast in June.
–With assistance from Joel Rinneby.
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