Norway's economy grew faster in the first quarter than the central bank and analysts had expected, data from Statistics Norway showed on Wednesday, but economists still expect a June interest rate cut. Investment cuts by oil firms had been expected to take their toll on the country's economy, where the massive offshore sector generates a fifth of GDP. But preliminary numbers showed a rise of 0.8 percent in petroleum investments.
"Oil investments were surprising. They rose, while we had expected a drop. It looks like the fall in oil investments is coming a bit later than had been expected," DNB economist Kyrre Aamdal said. Even though global oil prices have climbed more than 40 percent from six-year lows last January to touch 2015 highs in early May, prices still remain at about half of their June 2014 peak.
Growth on the mainland, which excludes the direct offshore investments but includes indirect effects on employment and consumption, accelerated to 0.5 percent on the quarter, beating forecasts for 0.2 percent while overall growth slowed to 0.2 percent, beating expectations for a drop of 0.1 percent. The fourth quarter mainland growth figure was revised down to 0.4 percent from an initial 0.5 percent. "The first impression was stronger than expected. We had expected slower growth in the mainland economy because of the weakness in the oil industry," Nordea Chief Analyst Eric Bruce said.
Five analysts Reuters spoke to after the data all said they expected a rate cut at the central bank's June meeting, even though the new data was stronger than Norges Bank's forecast for mainland growth of between 0.3 and 0.4 percent in the first quarter. For the first time since the second quarter of 2010 there was no growth in employment in the quarter, Statistics Norway said.
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