GOVERNMENT TO DAMPEN ANY SHORT-TERM BOOM

Press, Volume CVIII, Issue 31830, 7 November 1968, Page 22

GOVERNMENT TO DAMPEN ANY SHORT-TERM BOOM

(New Zealand Press Association)

WELLINGTON, November 6.

The Minister of Finance (Mr Muldoon) expressed concern today that a shortterm economic boom could destroy the advances the economy had made in the last two years.

He feared the boom might happen before the Government could implement the proposals for medium and long - term economic adjustment which were being formulated by the National Development Conference.

But he said, it would be Government policy to see that demand did not increase too rapidly, and that no encouragement was given to those who were over-import-ing.

“The appropriate weapons to achieve this are available to the Government, and they will, if necessary, be used,” he said. The Minister said the recent run-down of unemployment figures and other economic indicators suggested a quickening in economic activity.

Noting that at the end of September, New Zealand’s external transactions for the year showed a surplus of s63m, the Minister said this surplus was greater than he would have predicted at any time during the year. Level Out

“I have been saying for some months that I expect this current surplus to level out and then diminish as economic activity builds up. “The September figure may

well be the peak, and although the October figure could possibly be similar, I believe that October would be the last month in which this peak position would be approached, and that increasing economic activity and increasing import payments in particular are likely to run this surplus down in the next few months,” he said. Mr Muldoon said he could visualise in 1969 a situation where the relatively large external surplus dropped to the extent where there was an approximate balance in current transactions.

-“It is certainly not my intention to see our current account go into the kind of deficit that we have been experiencing in recent years,” he said. “If this balance can be maintained in the meantime

then I am sure that the development of the export side of our economy is capable of taking care of the necessary increases for which we are planning and which will ensure a gradually increasing standard of living for a rising population.” He said some part of New Zealand's capital development would continue to be financed through overseas borrowing and he was hopeful that before long New Zealand would be able to take part in the United States capital market. ~

The Minister said New Zealand was just establishing its position on the United States capital market at the time that restrictions were intensified some three or four years ago. “But this will become clearer as the new American Administration sets out its policies,” said Mr Muldoon.