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Norway non-oil GDP surprisingly grows in Q2

Published 08/20/2009, 04:44 AM
Updated 08/20/2009, 04:51 AM
EUR/NOK
-

* Non-oil GDP grows 0.3 pct qtr/qtr vs forecast fall

* Overall GDP down 1.3 pct qtr/qtr, weaker than forecast

* Strong data boosts pressure on rate hikes, crown up

OSLO, Aug 20 (Reuters) - Norway's non-oil economy unexpectedly grew 0.3 percent in the second quarter following two quarters of recession, raising pressure on the central bank to raise interest rates from record lows and lifting the crown.

Analysts surveyed by Reuters expected non-oil gross domestic product to shrink by 0.2 percent during the April-June period.

Overall GDP, a measure that includes the North Sea state's vast offshore oil and gas sectors, shrank by 1.3 percent quarter on quarter, more than the 0.8 percent slide predicted by analysts. [ID:nLE381610]

Norway's economy remains the strongest across the Nordics, whose small, export-oriented economies have been hit hard by the global crisis, triggering talk of rate increases this year.

"The non-oil economy was stronger than expected so the recession is over -- growth has returned after a couple of quarters of decline," said Erik Bruce, chief analyst at Nordea Markets in Oslo, who expects a rate rise in October.

A number of countries -- notably France and Germany -- exited recession in the second quarter, earlier than many economists expected.

During the downturn Norway has been sustained by its oil and gas sector, stimulus measures by its deep-pocketed government and a series of central bank rate cuts which have pushed the main deposit rate to a record low of 1.25 percent.

The central bank said last week that interest rate increases could take place earlier than the second quarter of 2010 as inflation remains benign and the economy is stabilising.

In year-on-year terms, non-oil GDP shrank 5.0 percent, against a 1.1 percent rise in the first quarter. Overall GDP was down by 4.8 percent, Statistics Norway said.

Sweden's GDP surprised on the upside by falling 6.2 percent in the second quarter [ID:nLV331899], while Finnish GDP shrank by 11.1 percent year-on-year in June.

The Norwegian crown firmed to 8.5946 against the euro by 0928 GMT from around 8.6133 before the data. (Reporting by Oslo newsroom, editing by Mike Peacock)

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