Gloomy N.Z. survey

Press, 11 July 1979, Page 7

Gloomy N.Z. survey

PA Wellington In a gloomy survey of the New Zealand economy, the Bank of New South Whies says companies now prefer toj, meet any increased demand by allowing overtime to rise rather than take on new workers. “For as long as this’ trend continue s ,’ says the “B.N.S.W. Review,”'’ “The outlook for reducing unemployment will remain bleak.” Production is likely to fall by mid-way through the year in response to tightening liquidity as the Government’s deflationary monetary policy takes effect, says the survey. Deflationary policies are likely to boost the migration exodus because “low margins for skills and high taxation in New Zealand have

awakened interest in jobs overseas.”

Unemployment continued to rise in the year to March 31 in spite of accelerating emigration, which resulted in a net loss for the year of 40,200 people mainly- of those aged 20 to 29. An upsurge in consumer demand towards the end of 1978;. sustained by increased Government deficit spending, stimulated production and raised capacity utilisation, the survey says. “In the face of rising costs and uncertainty that the stronger demand could be maintained, business confidence remained weak, however, with companies reluctant to invest and manufacturers tending to let their stocks run down.”

The declining trend in the

rate of inflation evident in 1978 was reversed early in 1979, it says. “The rise of 2.3 per cent in the consumers’ price index in the March quarter signalled an annual rate of more than 10 per cent. Higher electricity and petrol i prices, increased sales tax on a wide range of luxury and household items, reduced subsidies on milk and butter, and the relaxation of price controls on many goods and services portend stronger increases in the C.P.I. later this year.” The survey also predicts that higher prices are expected to limit sales of motor vehicles to 65,000 in the 12 months to next April, compared with 66,800 for the 12- months to April, 1979.