N.Z.’s Short-Run Prospects Less

Press, Volume CIV, Issue 30880, 13 October 1965, Page 11

N.Z.’s Short-Run Prospects Less

. n “ C ® nfi . d ® nce in , short-run prospects has j alien slightly as the severity of the current balance Oi payments problem becomes more videix appieciated and as the Government’s policx of ci edit restraint affects more sectors of the economy and an increasing proportion of the community,” says the A.N.Z. Bank’s quarterly survey of New Zealand.

Business activity was still at a very high level and there was ample evidence that available resources were insufficient to support current levels of spending. “Somewhat hesitantly” the Government has grasped the economic nettle and, at intervals. has introduced various measures to limit spending. “With the exception of direct controls aimed at deferring commencement of larger building projects, the major official effort has been concentrated on reducing the flow of loan funds to the private sector,” says the review. ■ Problem “The thorny problem facing the policymakers is whether or not the cumulative

effect of existing policies is likely to achieve the objective of full, but not over-full, employment of resources.” So far, most discussion on the need for restraint had centred on the related problems of controlling spending on imports and easing the over-strained labour market. However, an equally important objective was to produce a situation where the farm and export development programme could be implemented. “If the state of excess demand is permitted to continue, the farming and ancillary industries could well be unable to acquire the resources needed to achieve the national objective of a 4 per cent annual increase in production,” adds the review.