The Press SATURDAY, JUNE 1, 1963. Election-Year Imports

Press, Volume CII, Issue 30146, 1 June 1963, Page 10

The Press SATURDAY, JUNE 1, 1963. Election-Year Imports

At first glance the latest statistics on overseas exchange transactions are

reassuring. Receipts exceeded payments by £2B million in the year ended April 30, and net overseas assets of the banking system rose £32 million in the year. (The difference is accounted for by changes in the level of assets held overseas by the Treasury, and by different balance dates.) Admittedly, £22 bullion of last year’s receipts (and of the increase in overseas assets) represented net borrowing abroad; but this is £4 million less than in the previous ‘year. The big improvement was in current account items, which resulted in a favourable balance of £6 million compared with a deficit the previous year of more than £l9 million.

The current account balance is the sum of the trade balance and the balance on invisible items. In the latest period, the trade balance was a surplus of £ 65 million, or £ 33 million more than in the previous year —more than sufficient to offset the increase from £5l million to £5B million in the deficit on invisible items. This deficit is the most consistent of all items in New Zealand’s balance of payments. Whatever the fluctuations in export receipts, import payments, and loan transactions, New Zealand invariably shows a deficit oi) invisible transactions because we find it more profitable to use other countries’ cargo and passenger ships, air lines, business services (such as insurance), and capital, and to pay freight, fares, dividends, royalties, and com-

missions for the use of them. The deficit on invisible items has risen from £47 million to £5B million in the - last two years. The inexorable rise in these items must be covered by increasing trade surpluses. Continued restraint in spending on imports—of which private imports comprise more than 90 per cent, —is the only certain way to provide for probable rises in future payments for invisible items. The recent improvement in export prices for wool, meat, and butter merely gives New Zealand a breathing-space to develop urgently-needed new markets; these gains should be reflected in a more adequate level of overseas reserves rather than in increased imports. Ominous signs of a sharp rise in the rate of importing have appeared in recent months. Private imports in the year ended April totalled £241 million, compared with £243 million in the previous 12 months; - but these annual figures conceal an alarming recent trend. In the first five months of the year private imports were £2l million lower than in the comparable period of the previous year; in the last seven months they were £l9 million higher, the April figure of £2O million being nearly £5 million higher. Spending on imports at this rate cannot be sustained without seriously depleting overseas reserves or necessitating further overseas borrowing. The trend is clearly apparent now, five months before the election. It has the unmistakable look of an election-year spending spree.