Firm’s Review Calls For Living Within Means

Press, Volume XCVII, Issue 28702, 27 September 1958, Page 8

Firm’s Review Calls For Living Within Means

New Zealand must learn to live within its means and maintain an equilibrium in its overseas trade, says the 58th annual review of Pyne, Gould, Gtiinness, Ltd. “Prices for our products in our overseas markets are beyond control from New Zealand, but the volume of imports can be regulated and should be to the extent of our capacity to pay for them.” The review notes that the 195758 period has a particular claim to prominence in that it marks the end of the post-war economic boom. “That the boom has been replaced by something much less than a ‘bust’ is something to be thankful 'for,” it says. By July of this year there had been definite signs that a turning point had been reached in the recession in the United States and the next few months would show if the revival in trade was shared in other countries. Many countries faced periods of adjustment and would have to work out the problems that had accumulated during the last few years of unprecedented growth and prosperity. The strong dynamic urge for growth, manifest everywhere, should powerfully assist this process. Business depressions in countries that were good customers for New Zealand’s exports could not fail to have repercussions in this country. Lower prices frtr meat, wool, butter and cheese had had to be accepted, thus creating a less buoyant economy. Since November of last year prices for New Zealand butter on the London market had dropped by 22J per cent., cheese by 10 per cent., lamb by 20 per cent, and wool by 28 per cent., and while this situation was sufficient to shake complacency it did not, of itself, place New Zealand in economic peril. Unfortunately the decrease in export earnings had coincided with a record spate of imports thus creating an adverse balance between receipts and payments of foreign exchange that had never before been equalled. “Entirely Inadequate”

‘‘The so-called credit squeeze from 1955 to 1957 proved entirely inadequate to curb imports and in Januapr of this year a rigid system of import control was once again instituted. Since January New Zealand’s trade prospects have worsened through lower prices for exports and if these prices remain at their present level and import control reaches its target. New Zealand will still be ‘in the red’ in her external bal-

ance of payments to the extent of about £som at the end of 1958; and this after borrowing £19.5 m. in the United Kingdom and £Bm in Australia. The Prime Minister (Mr Nash) recently indicated that further borrowing to an extent of £2sm will be necessary before the end of the year. It is rather a grim picture. ...”

But the review said that New Zealand’s internal economy wds in a strong ppsition. It was supported by high purchasing power, full employment, stabilisation funds, and guaranteed prices to cushion the fall in exporters’ incomes and by the fact that because of industrial growth farmers’ incomes were now only one seventh of the national income.

New Zealand’s economy could not be insulated from trading trends in the outside world; but provided the recession was not prolonged overseas it should suffer little more than a slowing down of its rapid post-war expansion.