OUTLOOK IN AUSTRALIA

Press, Volume XCVII, Issue 28552, 3 April 1958, Page 17

OUTLOOK IN AUSTRALIA

Deterioration Of Balance

“The effects of deterioration in the balance of payments have been reflected in internal prosperity, directly through the reduction of- incomes of rural producers, and indirectly through the loss of overseas currency resources causing a deterioration in the available liquid resources of the banking system,” states A.N.Z. Bank’s April “Quarterly Survey.” “The check to boom levels of activity is also shown in some of the statistics of factory production. The A.N.Z. Bank Index of volume of factory output has been rising generally in recent years; the 1956-57 year showing an index of 119, compared with 114 in 1955-56 and 100 in 1953-54. But some of the production items contributing to total volume have not displayed a consistent rise in the latest monthly figures. “As for the future, the Australian economy has so much scope for development that any signs of slackening economic activity will be accepted as an indication that inflationary pressures are easing and that some labour and material resources may be available to meet the requirements of new phases of expansion. Both the private enterprise and government sectors are ready to take up any slack,” says the “Survey."

“The outstanding feature of the Australian economy etoday is that internal activity receives too much stimulation from works of national development. Fluctuations in export markets are thus not of such great significance as in earlier periods. The speed ot recent national development and the volume of work remaining to be done in Australia to round off earlier phases of expansion, while continuing to push forward with new ones, is at the root of the contrast between the United Kingdom, the United States and the Australian capital markets today.” The "Survey” points out that “there are ample financial resources available in the banking system to enable such work to be expanded Progressive releases of these funds, combined with an extension of public works activity, could rapids' absorb unused resources of men and materials, without running the risk of price rises which would increase internal costs. By this means, internal activity could be maintained at a high level while in no way impairing Australia’s capacity to compete in world markets for her major exports. Such decisions, however, involve most careful timing. It is imperative that the necessary stimulation should be imparted to the economy before unemployment spreads and plant becomes idle.”