Optimism on N.Z. outlook

Press, Volume CXIV, Issue 33702, 27 November 1974, Page 2

Optimism on N.Z. outlook

(New Zealand Press Association) WELLINGTON, November 26. The Secretary of the Treasury (Mr H. G. Lang) is “optimistic, very optimistic” that New Zealand can ride out the international economic crisis.

Fresh from a two-month series of meetings with world bankers and economists, he tempered his optimism with a warning that New Zealand’s economy was still very sensitive to fluctuations in the economies of this country’s main trading partners. Mr Lang said he was confident that the crisis could be weathered without serious disruption, unemployment or recession. The key was to contain inflation below double-figures. “1 am confident this can be done,” Mr Lang said. “But the question is how quickly — that I cannot say.” ANSWER SOON High inflation among New Zealand’s main trading partners would have an unavoidable effect on this country’s economy, Mr Lang said, but he was confident Western leaders would exercise the power they had to prevent rampant inflation from lowering the world into a big depression. Prospects for the world economy should be clarified one way or the other within the next few months, he said. If a serious slump were avoided, export prices for New Zealand’s meat and wool should pick up within the next nine to 18 months. Mr Lang said New Zealand was doing well in containing inflation. Unemployment was not significant at a time when other nations were resorting to high un-

employment in attempts to contain inflation. If policies to beat inflation were too extreme, the world could slide into a big slump. The Western world faced a situation where prices were rising rapidly while economies were battling against a recession. None of the experts had the complete answer to the problem, said Mr Lang. New Zealand’s “exceptionally high" international credit rating would help in making adjustments to contain inflation without causing serious disruption. The sharp increase in oil prices was not the only cause of the crisis, although undoubtedly a major reason, Mr Lang said. Pressure from many income groups — not just wage and salary earners — for big pay rises that could not be sustained by higher productivity was another key factor. IMPORT CURBS Mr Lang said that trade protectionism might be forced on Governments faced with high unemployment, and this could harm New Zealand. Equally, the introduction by New Zealand of import curbs could make it difficult to justify easy access for this country’s exports to international markets. For import controls to be really effective, imports of raw materials and components would have to be cut, which would adversely effect internal employment.