In January, Norway’s economy surged at a significantly faster rate than anticipated, indicating that the fossil fuel-rich Nordic nation is managing the impact of rising living costs better than expected.

According to data released by Statistics Norway on Monday, the mainland gross domestic product, excluding the offshore industry, grew by 0.4% from December, surpassing both the highest economist estimates surveyed by Bloomberg and the central bank’s projection of a 0.2% decline.

The increase was primarily driven by the wholesale and retail trade sectors, followed by the electricity industry, as reported by the statistics office.

This latest data suggests that policymakers at the central bank are unlikely to hastily reduce the key interest rate, currently at 4.5%, despite a slowdown in price growth. Despite a reduction in consumer spending by Norwegians, the mainland economy has continued to defy recession concerns, expanding by 0.7% last year, supported by the oil and gas sectors benefiting from windfall gains following European sanctions on Russia.

This positive development aligns with the forecasts of Norway’s finance ministry, which recently predicted a slightly accelerated pace of expansion for the mainland economy in 2024, at 0.9%. In contrast, the central bank had projected a mere 0.1% growth for the entire year in December.

However, a crucial central bank survey of business contacts indicated last week that economic output is expected to contract by 0.1% in the first quarter, with activity remaining largely unchanged throughout the first half of the year.