Trade deficit ‘reducing’

Press, 9 October 1976, Page 6

Trade deficit ‘reducing’

PA Wellington The trend of import orders offered no cause for alarm, said the Deputy Minister of Finance (Mr Gair) yesterday. Commenting on the release of forward-order import statistics, Mr Gair said that the essential feature of the external accounts was that the size of the deficit was being steadily reduced. “For the year ended August, 1975. there was a deficit of $995M between exports and other current receipts and what we spent overseas by way of imports and other current payments. “By way of contrast, the gap or deficit, recorded for the year ended August, 1976, was down to $739M. This is still too high but it is reducing-"

Mr Gair said a true measure of the reduction in the size of the deficit could be obtained by expressing the deficit as a percentage of New Zealand’s current overseas receipts. “It can be seen that while the deficit was 44 per cent of overseas receipts in the year ended August, 1975, the Government had whittled that down to 23 per cent for the year ended August, 1976. “Using that measure, the Government had virtually cut the problem down to.half its former size.” Mr Gair said it was present policy to increase oil stocks before another price increase of the Organisation of Petroleum Exporting Countries. Since May, there had been virtually no change in total import orders, excluding oil. Apart from oil, the major component in import orders was machinery and transport equipment — and this had moved significantly downward since April.

“So-called luxury imports are now so small a proportion of total imports that even to cut them out entirely would have a negligible effect on the over-all position,” Mr Gair said.