Bank sees stage set for business growth

Press, Volume CXII, Issue 32998, 18 August 1972, Page 15

Bank sees stage set for business growth

“Signs of an improvement in business activity were beginning to appear at the end of 1971 and in the early weeks of 1972, but since then, the recovery seems to have been at least partially checked,” says the A.N.Z. Bank in an article entitled “The Present Outlook in New Zealand” in the July edition of its “Quarterly Survey.”

“The June Budget no doubt, improved short and mediumterm business prospects, but has been interpreted in some quarters as inflationary. “Meanwhile, for most of the first half of 1972, there was evident need to provide greater stimulus to business activity.

“As indicated by the meagre amount of overtime being worked so far this year, there is at present no shortage of productive capacity in New Zealand. While consumer demand remains slack, there is nothing to encourage producers to increase output, let alone expand capacity. “It should be noted, too, that encouragement of consumer spending at present need not militate against the major aim of controlling inflation.

“Despite a welcome upturn in the March quarter of this year, retail spending per head of population, after adjustment for inflated prices, is still below the levels reached in mid-1970. “Liquidity problems continue to hamper many businesses but, over-all, private sector liquidity is now bettei than at any time during last year. - “Trading bank credit approvals have expanded more rapidly than has actual use

of bank credit,” says the A.N.Z. Bank. “Consequently, at the end of April when the effects of the tax flow were still being felt, 29 per cent of credit limits were not being utilised. Last year the proportion was 25 per cent. If the economy revives as expected in the latter part of this year, some of this slack will be taken up, with the result that bank lending could increase at a rapid rate. “The Government has indi-

cated its desire that business activity should increase, and, given the current stance ot official policy, credit availability should prove no barrier to expansion this year. “The stage seems now set for a resumption of steady, and perhaps even strong, growth in business activity. Confidence is returning and increased consumer spending is likely to herald such a recovery during the next few months,” the bank says.