Norway's recovering economy grew more than expected in the first half of the year, data showed on Thursday, and forecasts for investment by oil companies in 2017 were raised, strengthening the crown. The turnaround follows a two-year slump that began as oil companies cut investment and laid off thousands of workers following a drop in the price of crude oil, Norway's leading export.
The government of Conservative Prime Minister Erna Solberg will probably use the data to show it has helped turn the country's economy around before Norway's general election on September 11. The election is too close to call, opinion polls show. Mainland gross domestic product, which excludes the volatile oil and shipping sectors, grew by 0.7 percent in the second quarter, compared with expectations for 0.6 percent in a Reuters poll. First-quarter GDP was revised to 0.7 percent from 0.6 percent.
"The GDP numbers are very strong, and the best thing about them is that they show employment growth of 0.4 percent for the quarter, which points to a solid labour market," said Nordea Markets economist Joachim Bernhardsen. "The downturn in the Norwegian economy that was caused by a fall in oil investments is now behind us," he said.
Helping the economy further, oil companies have raised their forecasts for 2017 investments to 155.6 billion crowns ($19.82 billion) from 154.4 billion crowns in May, Statistics Norway said in a separate statement on Thursday. The investment outlook was cut for 2018, to 141.7 billion crowns from 144.0 billion crowns seen in May. But Statistics Norway said it expected to revise the 2018 numbers upwards at a later time as more development plans for oil and gas fields are submitted to authorities. The Norwegian crown strengthened against the euro, trading at 9.2600 at 0758 GMT from 9.2885 just before the data was released.
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