Bank Journal Sees New Confidence In Future

Press, Volume XCIX, Issue 29102, 14 January 1960, Page 13

Bank Journal Sees New Confidence In Future

' In the last 12 months, in spite of some understandable hesitancy, a new confidence in future growth and expansion has become evident in New Zealand. Mounting inflationary pressure in the coming year, an election year, however, appears a distinct possibility to be guarded against,” says A.N.Z. Bank’s January quarterly survey. “Basically the new confidence stems from the notable improvement in overseas trade,” says the bank. “Wool receipts should increase materially.

“Butter and cheese prices reached record levels, and though these cannot be regarded as a permanent basis, future prospects still appear satisfactory. Beef prospects, too, seem sound. “Lamb, however, presents a more disquieting picture,” the survey says. “With increasing production of both lambs and broiler chickens in the only major market, the United Kingdom, there are likely to be serious problems in marketing the year's kill.

“Efforts will be required to find new markets and to increase consumption if the fat lamb industry is not to suffer severely. Private Imports

“Private imports during 1959 were at exceptionally low levels. The 1960 Licensing Schedule announced in October last, adopted a cautious approach in easing import restrictions.

“The improved economic outlook has also enabled the New Zealand Government to relax other restrictions imposed some two years earlier to meet the current difficulties.

“Almost all these changes have been concentrated on items likely to increase purchasing power and consumption expenditure, which will be expanded also by the substantial general increase in award wages granted by the Arbitration Court in October.

“Most of the stimulus has been in the form of taxation concessions and increased social security payments, and many of the adjustments have been made since the Budget. “There is thus a likelihood that the Government will record a substantial deficit in the fiscal year, 1960, thereby adding to inflationary pressures generated by higher farm incomes and the general wage increase. “Private capital investment,

however, continues to be restramed and. in this respect, the Shanses may not be in the best interests of the economy in term '” says the bank - With farm and factory production also at high levels, the economic outlook for 1960 is expansionary. Inflationary pressui e is mounting and care will be necessary to ensure that demand can be met without imposing undue strain on the economy.

‘‘Within these limits it seems that higher priority is due to investment expenditure, and emphasis on this aspect might review the need for capital issues control and also the restraint of bank credit.”