Bad showing by N.Z.

Press, 29 July 1976, Page 2

Bad showing by N.Z.

KZPA Staff Correspondent London The 24-nation Organisation for Economic Co-operation and Development has forecast growing unemployment in New Zealand in the next 12 months. Special Government unemployment programmes have helped to limit the rise so far, but. with the nation’s' gross domestic product expected to decline sharply, the labour market is likely to deteriorate throughout the next 12 months, the O.E.C.D. said. The prediction came in the Paris-based organisation’s twice-yearly "Economic Outlook". an assessment of economic trends an 1 prospects in member countries. It predicted a 3.5 per cent drop in New Zealand’s G.N.P. during 1976, the

worst performance of any O.E.C.D. nation. By contrast, the report forecast an average growth of real G.D.P. of about 3 per cent for member States. The report predicts a 4 per cent drop in private con-j sumption in New Zealand in 1976. a 2 per cent fall in industrial production and an 18 per cent rise in the con-( sumer price index. For the 12 months to last May. New Zealand prices rose 17.2 per cent, the report said — the third highest, increase in the organisation, after Iceland and Spain, and getting on for double the O.E.C.D. average of 9 per cent. But looking ahead, the report predicts improvement in New Zealand’s current balance of account and trade deficits in early 1977. It for-

sees a current deficit in the first half of next year of about SLJS7OOM against the SUS7SOM it lists for this vear and SUSI4S6M for 1975. The trade balance deficit will improve to SUS 100 M, against SUSISOM this year and SUSB34M in 1975. “In Australia and New! Zealand fiscal policy is ex-> pected to become less ex-j pansionary in 1976.” the re-; port says. “The rapid in-l crease in Government ex-i penditures in New Zealand: in late 1974 began to taper| off after "iid-1975 and the; indications are that it will) slow down further in 1976; as the Government attempts! to improve the external position. “Sharp reductions in subsidies for food, rail, electricity and mail and telephone services, and a higher;

tax on petrol should help in reducing the current external deficit throughout the year.”

The report also predicts an improvement in prices of New Zealand’s main agricultural exports.

“There are indications that a turning point has been Teached in the beef cycle,” it says. "Rising demand for [beef, lamb, butter, oils and fats may lead to continued price rises."

j Tables in the report forecast an increase in New ■Zealand’s exports in the first (half of 1977 of 5.5 per cent, jin volume and 8 per cent in lvalue. In 1976, according to (the tables, New Zealand’s exports will have risen 3.25 per cent in volume but 30 per cent in value. Imports will fall 2.5 per cent in volume in the first (six months of next year, but will cost 8 per cent more.