Norway’s economy has started to recover from the blow dealt by the oil price slump, but things are improving slowly, according to the latest data from the country’s statistics agency.
Statistics Norway said today that gross domestic product, excluding oil and gas income, expanded by 0.3 percent on a quarterly basis between October and December 2016, versus analyst expectations of 0.4-percent growth, as estimated by Bloomberg.
Including oil and gas income, GDP expanded by 1.1 percent, the authority said, on the back of rising oil investments – these went up for the first time in 13 quarters in Q4 2016.
However, a Handelsbanken analyst said in a note that the local energy industry is not yet out of the woods, recalling that this year, investments in oil and gas projects are seen down 10 percent on 2016. On the bright side, Marius Gonsholt Hov noted, this was the smallest cut in annual investments for the last three years.
The Norwegian oil and gas industry has benefited from OPEC’s decision to cut production, with industry players in the country now more optimistic about their short-term prospects. Norway itself has managed to avoid a recession despite the importance of oil and gas income for the budget, and thanks to spending from its oil wealth and record low interest rates.
State-owned Statoil, the flagman of the Norwegian oil industry, earlier this week reported a surprising loss for the fourth quarter – the third quarterly loss in a row – on the back of a US$2.3-billion impairment on its long-term oil price assumptions, but it remained upbeat for 2017.
The company said that it will start increasing investments this year, allocating US$11 billion for new and ongoing projects. Last year, Statoil spent US$10 billion, half of what it had allocated for 2014. Investments will continue to grow in the coming years, to US$12-14 billion annually until 2020.
By Irina Slav for Oilprice.com
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