Bank Sees N.Z. Internal Demand “High As Ever”

Press, Volume C, Issue 29537, 12 June 1961, Page 17

Bank Sees N.Z. Internal Demand “High As Ever”

Internal demand Is as Ugh as ever in New Zealand in spite of the various brakes which have now been applied, comments the Bank of New South Wales in its latest quarterly review. The review says that bank advances have risen sharply this year, notified vacancies are still climbing, unemployment is negligible, and private imports are still running very strongly. The implication* of the unpleasantly low level of oversees reserves and the dull prospect for export prices have not yet affected the state of business confidence. For the March quarter of this year import payments totalled £ 82.5 m. one-third more than a year ago. Trading bank advancer reached the recordr peek of £ 238.9 m early in April, and deposits were aimllarly buoyant at £329m.. altliough their expansion was much smaller A restrictive policy, however, has been reimposed to tighten selective control of advances and to reinstate a target figure for loan*. Notified vacancies increased to 0662 at the end of March, whilst known unemployment fell to 234. Yet this increasing pressure is having surprisingly little effect on prices. The extremely heavy supply of imports has been an important stabilising factor, but cannot continue to be so indefinitely, for reserves of overseas exchange are disturbingly low. Appreciation of Situation An appreciation of this situation. continues the review, undoubtedly lies behind the step* taken recently towards New Zealand becoming a member of the International Monetary Fund and the World Bank. Membership of the International Monetary Fund, which wss set up to help nations with balance of payments difficulties with which New Zealand is so familiar, could help towards smoothing out the recurrent crises such as that of 1957 and now. The recent increase tn the facilities of the fund and current reconsideration of its functions will also help to make It more useful In future Access to the resources of the Bank may be equally valuable in the period of forced development to which New Zealand is now committed.

In spite of diminishing external resources and the unexpected cash surplus achieved by the Government in the year ended March, the economy remains extremely liquid. This was undoubtedly » major factor in the success of the recent £ 10m Government loan which attracted £ 13.6 m in non-denartmental subscriptions, and became the first official loan to close oversu b««ribed for a long time. The situation remains potentially explosive, and the measures taken so far appear unlikely to prove adequate to restrain rapidly enough either internal demand or the pressures on overseas balances. So far, the Government hat shown a commendable reluctance to be driven to panic measures but it is to be hoped that in refraining to take crash action to redress the situation, it will not delay over-long the more moderate measures which, it is becoming clear, are necessary to enable New Zealand to live within its overseas income and to contain excess demend at home, the review adds.

Lusteroid Dividend.—Lusteroid Holdings (New Zealand), Ltd., has announced a final dividend of 9 per eent., payable on July 20. ex dividend on June 20. This makes 15 per cent, for the year, while the dividend for the previous year was also 15 per cent, but Included a 2j per cent, bonus dividend. Electronic Ind.—Electronic Industries. Ltd.. Melbourne, has declared interim dividends of 3} per cent and 3 per cent, respectively on the 6J per cent and 6 per cent cumulative preference share*, payable on June 30 and ex dividend on June 17.