Norway’s economy saw zero growth in the second quarter of this year due to soaring inflation and rising interest rates that dampened consumer demand, the country’s statistics office reported this week.
Mainland gross domestic product (GDP), which excludes Norway’s offshore industry, stagnated compared to the previous quarter and remained at 0.2% following a weak performance in a number of industries, the figures showed.
Construction had the largest negative impact on the country’s GDP in the second quarter as investment in housing slumped, according to the report.
“Growth is clearly coming down and has been below trend in the first half, driven mainly by a slowdown in private consumption and residential investments on a cocktail of higher rates and negative real wage growth,” Danske Bank A/S economist Frank Jullum said.
So far, fossil-fuel-rich Norway has been more resilient to the economic headwinds of the cost-of-living crisis than its peers in the Nordic region. Its GDP performed weaker between April and June than Norges Bank assumed, economists say.
Norway’s central bank has raised interest rates 12 times since 2021 in an effort to bring down inflation by slowing the economy.
In its June report, the OECD warned that “high inflation and policy tightening are weighing on domestic demand,” adding that Norwegian economic output would remain moderate in 2024.
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