Growth below target

Press, Volume CXII, Issue 32861, 9 March 1972, Page 2

Growth below target

CN.Z. Press Association) WELLINGTON, March 8. Economic growth had been handicapped by the failure to implement some of the basic recommendations of the 1969 targets committee report on changes in policy and attitudes, said the report of the Targets Advisory Group to the National Development Conference today. The proportion of gross national product flowing into investment and savings had declined to well below target requirements and pric-- had risen at an alarming rate. “In these essential respects the recent performance of the economy has been particularly poor,” the report sai' “Unless trends are reversed, real growth rates in the seventies are likely to remain below the average of the last decade rather than rise above it, and the achievement of full employment will present increasing problems.” “WELL DOWN” The real growth rate for the four years to date of the first five-year target period appeared to have averaged scarcely 3.5 per cent annually, well below the average of the previous decade. Some of the factors | responsible were wholly or mainly outside New Zea-

land’s control. The labour: force grew more slowly than 1 expected and droughts hit ] farming for two successive i years. The terms of trade i declined to a low point in i 1970-71, cutting the external ( purchasing power of New Zealand’s exports 11 per | cent from the base year, the ; equivalent of two years’ , normal growth in export . earnings. ( 2.5 PER CENT AIM Productivity per person 1 employed must increase 2.5 < per cent each year for living i standards to rise 30 per cent j over the next 10 years, the j report said. This level of higher productivity, modest by . international standards, had ; been achieved by New Zea- ' land once only in the last six ' years. . Total gross national pro- ' duct (the real value of all goods and services pro- i duced) has been set a target ■ rise of 4.5 per cent annually, or 55 per cent over a decade. After allowing for population [ growth, this reduces to 30 per cent a head more over 1 the 10 years. Even this growth, the re- ' port said, would not easily ' be achieved. Export earnings are ex- . pected to more than double , between the financial years i 1972-73 and 1981-82, to reach i $3543m, .compared with : $1273m in the 1969-70 year, i assuming inflation averaging ! nearly 3.5 per cent a year for most export products. ; | Import prices are, however, : 1 assumed to rise a full 3.5 per • cent a year, beginning in

1972-73, so New Zealand’s terms of trade (the ratio of prices received for exports to prices paid for imports) are likely to show some further decline during the 19705, according to the report. Using the year 1957 and the figure 100 as a base, New i Zealand’s terms of trade declined to 87 in 1969-70, and ; are expected to fall to a level of 81 by the late 19705. The short-term outlook was for an improvement because of good export prices being received for agricultural products this season, the report said. FARMING FIRST The biggest contribution to increased exports is expected to come from agriculture though the growth rate will be slower than in manufacturing, forestry and tourism. The report expects that agriculture will provide 55 per cent of export earnings in 1981-82, compared with 74 per cent in 1969-70. Manufacturing will provide 14.6 per cent of exports in 1981-82 (5.3 per cent in 196970), forestry 8 per cent (5), transport 9 (7), tourism 5 (2), fisheries 2 (1), minerals 1.2 (0.1), other goods and services 5.7. Earnings from manufactured exports are expected to reach ssl7m in 1981-82 (s6Bm in 1969-70), agriculture $1949m ($942m) forestry s2Blm (s63m), fisheries (ss9m slsm), minerals s43m (Sim), tourism sl7Bm (s26m), transport (earnings from Air New Zealand, shipping, harbour boards) s3l3m ($88m).