‘Export downturn has arrived’

Press, 28 October 1977, Page 3

‘Export downturn has arrived’

PA Wellington New Zealand’s latest overseas exchange transactions figures showed that “the export downturn has arrived,” said the Opposition spokesman on finance, Mr R. J. Tizard, yesterday-

He was commenting on the September overseas exchange transactions figures issued by the Reserve Bank, which showed that exports in September were about the same as last year, but that major categories such as wool, meat, and butter had fallen.

“Unfortunately the situation is worse than the raw figures show,” Mr Tizard said. “Importers are borrowing overseas to pay for their imports, but this is a trend that cannot last. The true situation is much worse than the Reserve Bank indicates.” The current account deficit for the year ended September 30 improved by $224M to $492M from the S7I6M, recorded at the end of September, 1976, according to figures released by the Reserve Bank yesterday. But the figures for September show the deficit at S9SM, up S6M from the SB9M in September, 1976. “The deficit on a cash basis for the September year has deteriorated from the year to August 31. We can expect that the deficit will be up about S6OOM by Christmas or early in the New Year — and the whole export boom will have been squandered,” said Mr Tizard. In August this year, the monthly deficit was S7BM, while that for the year ended August was S4B6M, reports the bank. For the year ended September 30, the deficit was made up of a surplus on trade transactions of $256M (an improvement of $433M since the year ended September 30, 1976) and a deficit of $747M on “invisibles,” S2OBM higher than last year.

Export receipts rose by 5724 M an increase of 27 per cent over the year to September, 1976, to a level of $3,427M, while import payments rose by 10 per cent to $3,172M.

“Invisible” receipts amounted to $732M for the year to September, an increase of 18 per cent over the previous year, while invisible payments rose much faster, by 28 per cent to $1,479M. Capital account transactions during the year (including 1.M.F.) resulted in a net inflow of S4B6M consisting of a net inflow in official capital of $267M and a private sector inflow of S2I9M. Official overseas reserves at the end of September amounted to S6O2M. For the month of September export receipts

were only 3 per cent higher, at $236M, than for September last year with receipts for meat, wool and daily products, the major agricultural exports, all being lower. Import payments, at $265M, showed a slight increase of 3 per cent over the same month last year. This follows a 5 per cent rise in the August month and a 1 per cent increase for July. There was a net capital inflow of SII9M for the month of September, largely due to the proceeds of the recent United States bond issue of SIOIM.

The recent trend of increased overseas borrowing by the private sector continued, private capital receipts reaching S44M for the month of September. Over all there was a private capital inflow of S2SM. The Reserve Bank’s quarterly analysis shows that for the three months to September the current account deficit was S2I4M, S3BM less than for the same three months of 1976. Exports amounted to SB2IM, an increase of 13 per cent, while import payments continued to show a declining rate of increase, the S79BM being 3 per cent higher than for the three months to September, 1976.

The surplus on trade transactions, S23M, was the lowest recorded since the three months to January figure, reflecting the seasonal downturn as well as low export earnings for the month of September, the Reserve Bank said. A breakdown of the export figures shows meat exports 524.8 M higher at 5872.3 M for the year ended September, 1977, compared with $747.5M to September, 1976 and SSOBM to September, 1975. The United Kingdom took most meat exports (5245.5 M while the United States was the second biggest customer ($211.1M). Wool exports to the end of September this year were 5680.2 M, compared with $552.9M for the September year in 1976, and $294.2M for the September year, 1975.

European Economic Community countries, exclkding the United Kingdom, were the main customers for this September year ($235.6M) but the United Kingdom was the biggest single customer ($121.5M). Butter exports to this September were worth S2O9M with the United Kingdom taking by far the greatest amount (5176.3 M Manufactured exports rose $115.1M in the year ended September, 1977, to $512.1M compared with $397M in the September year, 1976, and $228.7M in 1975. Australia ($228.8M) anc Japan (5113.9 M were th< biggest buyers of manufac tured goods.