Overseas-exchange deficit $950M

Press, 2 December 1981, Page 3

Overseas-exchange deficit $950M

PA Wellington A current-account deficit of $194 million was recorded on overseas-exchange transactions in October, 1981, compared with a deficit of $BB million in October, 1981, according to the Reserve Bank.

The bank said that for the year to October, 1981, the deficit was $950 million, compared with deficits of $843 million for the year to September, 1981, and $515 million for the year to October, 1980. Export receipts for October, 1981, were only 4 per cent higher than in October, 1980, and export receipts for September, 1981, were also low. Receipts from meat (down 17 per cent) and wool (down 25 per cent) in particular were very low. This is thought partly to reflect continuing difficulties with payments for lamb ex-

ports to Iran and weak prices recently for beef and wool. However, dairy receipts, especially from exports of butter and cheese, were very high in October, 1981.

Import payments rose by 25 per cent to $534 million for October, 1981, an accelerating trend which is in line with indicators of increased economic activity in the economy during the last few months and which is consistent with increased orders for imported goods as shown in recent surveys. There was a deficit on trade transactions of $75 million for October, 1981. Invisible transactions resulted in a deficit of $ll9 million, giving in total the current-account deficit of $194 million. The chief economist of the Bank of New Zealand, Mr L. C. Bayliss, said that nobody

would derive any satisfaction from the figures. The Government needed to tackle the balance-of-pay-ments problem but had to balance it against its impact on employment and domestic factors. Mr Bayliss said, “We are all waiting for a final election result to see who wins and what they are going to do about it.” Mr Des O'Dea, editor of the Institute of Economic Research's “Quarterly Predictions,” said that the figures had been expected. They showed the impact of “think big” schemes getting under way as well as an expansion of the local economy as a result of the preelection boom. While there was already evidence of a tightening up in the economy, he hoped that action would not be taken quickly.