Gains affected by wage-price spiral

Press, Volume CXI, Issue 32629, 10 June 1971, Page 3

Gains affected by wage-price spiral

After more than a year of steady economic expansion and accretion of external reserves, the New Zealand economy in the year ended March 31 developed signs of marked disequilibrium, said the annual report of the Ministry of Foreign Affairs.

The chief symptom of the economic difficulties in the year was the internal wageprice spiral, and by the end of 1970 New Zealand’s terms of trade were the most disadvantageous recorded since 1926, with the exception of the big depression and Second World War. New Zealand’s trade with Australia had grown over the last five years from sl7sm to s32om a year, said the report. “Each country is the other’s best export market for manufacturers. Australian exports were strongly stimulated in 1970 by high import demand conditions in New Zealand. “The rate of increase of New Zealand’s exports to Australia was slower, the most spectacular growth having occurred two years earlier under the combined impetus of devaluation, and the temporary interruption of growth in New Zealand. “Imaginative use is being made of article 3:7 of the N.A.F.T.A., for combined industrial development in the two countries. The year was notable for the approval of two large motor vehicle rationalisation plans under this article,” said the report. U.S. CURBS “New Zealand’s trade with the United States has continued to be circumscribed by the various quantitative restrictions imposed on beef, mutton, and veal and dairy products. However the level of exports was not disrupted. “The developing countries, particularly those in SouthEast Asia, the Pacific Basin, and more recently South America, have been a target

area for market and product diversification. “Some of the markets in the South-west Pacific, although individually small, are collectively among the fastest growing. Between June, 1968, and June, 1970, New Zealand exports to- the Pacific Islands increased almost 50 per cent in value. RUSSIAN TRADE

"New Zealand concluded a most favoured nation trade agreement with Hungary in December, 1970, similar to

that signed with Rumania in 1969. The basis of New Zealand’s export trades with the Soviet Union, the countries of Eastern Europe and China has traditionally been wool, but those countries undoubtedly offer avenues for increased trade and export diversification.

“There was heavy demand for imported meat in the Soviet Union and Eastern Europe in 1970; and this fact, together with increased sales of New Zealand wool, is reflected in the trade statistics.

.“New Zealand’s exports to the Soviet Union and Eastern Europe increased about 50 per cent to s32m between July, 1969, and June, 1970. During the same period exports to China rose from $3.68m to $4.08m, mainly because of increased forest product sales.”