COMMERCIAL Business Confidence Continues To Rise

Press, Volume CX, Issue 32214, 5 February 1970, Page 15

COMMERCIAL Business Confidence Continues To Rise

The return of business confidence in response to New Zealand’s healthy foreign exchange position was continuing unabated, the Commercial Bank of Australia, Ltd, said in its latest . I Economic Review.

“The question which now arises,” it says, “is whether the economy could overreact to current developments by overrating its expectations?”

A recent survey by the New Zealand Institute of Economic Research showed that the present growth of orders, output and sales is exceeding the levels anticipated earlier, it said. From a superficial viewpoint, the economy could cope with quite vigorous expansion. The short-term overseas debt was low at ssom, and stockholdings were being maintained. Meat and wool exports had risen sharply in 1969, adding an extra sll7m to receipts between them.

Expectations would be stimulated by the continuing success of manufactured exports, the growth of the forest industries and the possibility of commercial oil finds, it said. Strong increases in internal indicators were signs of increasing confidence. Some “less welcome aspects of reality” were cited, however. Dairy products and wool were facing depressed overseas markets and falling prices, unless demand increased, the bank said, and

the period of favourable lamb prices might be ending. It predicted some dampening of world trade as monetary and fiscal policy was becoming effective in reducing internal demand in the United States.

But this was offset by a settling in the international money market and a strengthening of the British economy which might raise demand for New Zealand’s exports. The bank said the overseas marketing situation suggested the desirability, “if not the urgency,” of the gradual move from agriculture to manufacturing where profitable.