Economy recovers in Q1 2026

GDP returns to growth in first quarter of 2026: Norway's GDP grew 0.4% on a seasonally adjusted quarter-on-quarter basis in Q1, following a 0.6% contraction in the prior quarter. Meanwhile, mainland GDP grew 0.2% in seasonally adjusted quarter-on-quarter terms in Q1, unchanged from the previous quarter's reading. On a year-on-year basis, the economy grew 2.0% in Q1, unchanged from the prior quarter's reading. Additionally, mainland GDP grew 0.9% in annual terms in Q1, following a 1.7% expansion in the previous quarter.

Stronger underlying activity and higher oil output drive rebound: Relative to the prior quarter's data, figures in Q1 worsened for private consumption (-1.0% vs +0.9% in Q4), government consumption (+0.4% vs +0.6% in Q4), fixed investment (-7.2% vs +5.0% in Q4), exports of goods and services (-1.4% vs +3.5% in Q4) and imports of goods and services (-1.1% vs +3.0% in Q4). The rebound was driven by stronger underlying activity in parts of the mainland economy—particularly services and some manufacturing—alongside higher oil and gas production, supported by stable output at mature fields, new wells and recent field developments. Beneath the surface, most demand components were softer than in Q4. Household consumption fell, mainly a payback after car purchases were pulled forward in the prior quarter to dodge a tax change. Government consumption also lost steam as defense investment dropped sharply after a strong Q4. On the external front, exports edged lower, with weakness in engineering and electricity driving traditional goods exports down, and services exports falling as foreign shipping was disrupted by the Strait of Hormuz closure. Imports also declined, led by a sharp fall in car shipments, reflecting softer domestic demand.

Sequential GDP growth to stabilize in coming quarters: Looking ahead, GDP growth is seen broadly stabilizing in sequential terms in the coming quarters, supported by resilient household consumption—tighter monetary policy and higher inflation are unlikely to meaningfully dent purchasing power as wage growth remains strong—and by higher oil and gas prices, which should offer some support to public spending and petroleum investment. Still, interest-rate-sensitive sectors such as construction and mainland investment will likely act as drags. Norway is relatively insulated from the U.S.-Iran conflict, but wider geopolitical tensions or U.S.-EU trade frictions could weaken European demand and slow Norwegian growth. Oil price volatility remains a key risk, with higher prices supporting domestic activity. GDP growth is expected to strengthen in 2026 to a four-year high, though it is still projected to undershoot the Nordic average.

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