Archive for the ‘GPFG’ Category
In this post I present a closer look into the developments in the Norwegian Gross Domestic Product (GDP) and the Marginal Productivity of Debt (MPD) from households, non-Financials and municipalities.
Further a brief update on developments in credit/debt growth (for households, non-Financials and municipalities) in Norway. Sovereign debt and debts in the financial sector are not included in this analysis and for a complete analysis ALL DEBTS have to be included. Norway is a small and open economy that is exposed to developments in the global economy (like the price of oil) and its trade relations.
This post is an expansion to my previous post A closer Look into the Drivers of the Norwegian Economy’s recent Growth Success with some updates.
The post also presents a brief look at how recent years developments in the oil price and total petroleum extraction and sales have affected Norwegian GDP, credit/debt growth, the MPD and petroleum related expenditures and what this may portend for the near future.
NOTE: All financial data in this post are in the Giga Norwegian krone (GNOK; Billion NOK) unless otherwise specified. 6 NOK approximates now around 1 US dollar.
The chart illustrates how the Norwegian GDP has been on a steady growth trajectory during the recent four decades and how petroleum activities, which started in the late 1960’s, gained in relative importance of GDP developments. The effects of growth in the petroleum activities are documented to spill over into the mainland GDP.
In 2013 around 23% of Norway’s GDP was from petroleum related activities.
The acceleration in the Norwegian GDP from around 2004 have been identified to come from two main sources;
- The growth in the oil price that really took off from around 2004 spilled over to the mainland economy.
- The credit/debt growth from households, non-Financials and municipalities.
This was likely triggered by the growth in the oil price as it revived consumers’ perception of improved outlooks to service more debt as disposable income grew and interest rates started to decline (cheap credit), which again was reinforced from the feedback from rising housing prices and growth in stock indices (equity growth).
As Norwegian petroleum extraction is in general decline and its gross revenues subject to oil price developments, the remaining force to sustain Norwegian GDP growth is to entice the households for continued growth in debt financed consumption.