The spread of omicron affected the Norwegian economy through the end of 2021 and the beginning of 2022. In mid-February, infection control measures were removed, and activity increased. Despite increased activity in February and March of 0.6 and 1 per cent, respectively, GDP for Mainland Norway was 0.6 per cent lower in the first quarter compared to the previous quarter due to the decline in December and January.
‒ In March, the activity in the mainland economy was approximately back to the same level as in November, the month before the previous lockdown was introduced, says Head of National Accounts, Pål Sletten.
In 2021, the prices on several goods and services, which are traded internationally, increased significantly. The prices on oil and gas are especially important for the Norwegian economy. Gas prices increased markedly in the second half of last year, and reached a peak in March of this year, not long after the invasion of Ukraine began.
The price increase led to a sharp rise in exports and the trade balance reached 303 billion kroners in the first quarter. In comparison, the trade balance for the entire year of 2021 was 508 billion kroners.
Increased prices on oil and gas led to an increase of 5.6 per cent in Norway’s total GDP in the first quarter, measured in current prices and adjusted for seasonal variation.
‒ Norway experienced significant gains in terms of trade in the first quarter, says Sletten. The prices on exports increased far more than the price of imports. The increase in total GDP in current prices reflects these gains.
The recovery of the economy led to a strong increase in employment throughout 2021, which continued into the first quarter of 2022. Total employment rose by 0.4 per cent in the first quarter, equivalent to 12 400 persons.
Industries
The activity in service industries, including dwelling services, fell 0.1 per cent. Wholesale and retail trade decreased 2.9 per cent and contributed the most to the decline in service industries. The activity fell in December and January but rose in March. Professional, scientific and technical activities increased in the first quarter and dampened the decline.
Other goods production, which includes the primary industries, electricity production and construction, increased 1.9 per cent. Construction increased 2.8 per cent and was the largest contributor. The industry has struggled with a shortage of labor throughout the pandemic. The easing of travel restrictions led to an increase in activity in the first quarter. Traditional fishing increased in part due to the removal of quota restrictions on capelin fish and partly due to increased fishing of herring.
In the first quarter, value added in manufacturing and mining decreased 0.3 per cent. The consumer demand-driven part of the industry fell, while the supplier industry and export-oriented industry helped to curb the decline.
Activity in general government fell 1.6 per cent in the first quarter. Activity in central government fell 3.3 per cent, which is mainly due to reduced activity in hospitals. The number of absences due to illness were high and there was a significant increase in Covid-19 related admissions. Activity in local government decreased 0.2 per cent.
Activity in petroleum activities and foreign shipping fell 3.1 per cent in the first quarter. Total GDP for Norway, including oil and gas extraction, pipeline transport and ocean transport, thus fell 1.0 per cent. As a result of the growth in prices on natural gas and oil, gross domestic product was just short of 50 per cent higher in March 2022 than in the same month the year before.
Consumption
Household consumption increased 4.8 per cent in March. Nevertheless, consumption decreased 1.4 per cent in the first quarter. Consumption of goods fell 2.4 per cent in the first quarter and was particularly reduced by car purchases. Consumption of services decreased 0.3 per cent from the fourth quarter of 2021 to the first quarter of 2022. Passenger transport and accommodation and catering services were the largest negative contributors.
Total consumption in general government fell 1.4 per cent in the first quarter. Consumption in central government fell 3.4 per cent, and in local government consumption increased 0.5 per cent.
Investments
Gross investments for mainland Norway increased 1.3 per in the first quarter. Especially investments in other goods production and other services contributed to the growth. Investments in general governments decreased. This is due to high combat aircrafts deliveries in the previous quarter, and none in the first quarter.
Investments in dwellings decreased in January and February but increased in March, which led to a growth of 1.9 per cent in the first quarter.
Exports and imports
Total exports fell 3.5 per cent in the first quarter, adjusted for normal seasonal variation and measured in constant prices. It was especially the exports of crude oil and natural gas that contributed to the decline, which fell 5.5 per cent. The value of Norwegian exports has been very high since the second half of 2021. In March 2022, export values reached new heights, and are estimated to as much as NOK 259 billion measured in current prices. This corresponds to more than a doubling compared to March of last year.
Seasonally adjusted volume figures showed an increase of 0.2 per cent in imports compared with the previous quarter. Imports of traditional goods and services rose 0.9 and 1.4 per cent, respectively. On the other hand, imports of crude oil and natural gas helped to curb the rise.
Employment
Employment increased 0.4 per cent in the first quarter, adjusted for normal seasonal variation. Manufacturing, information and communication, and health and social work contributed the most to the growth. There was a decline in employment in accommodation and food service activities as well as human health activities, which dampened the growth. Meanwhile, number of hours worked, decreased 1 per cent in the first quarter. The number of non-residential wage earners was still lower in the first quarter of 2022 compared to the same quarter in 2019.
Revisions
In connection with new monthly figures, there will be revisions. The statistics used will not normally change for previous months. Seasonally adjusted series can, however, be affected, since the basis for the seasonal adjustment changes when new periods are added. The National Accounts has published an article on the revisions in the monthly national accounts.
Thursday 12th of March 2020 the Norwegian government introduced actions against the spreading of COVID-19 in Norway. The seasonal adjustment routine during the pandemic is done in such a way that figures during the crisis (from March), are not included when calculating the seasonal pattern. Technically, in the seasonal adjustment routine, this is done by specifying March and following months as outliers. The seasonal adjustment routine of Statics Norway is in line with the recommendations of Eurostat.