New Zealand not insulated

Press, 19 August 1982, Page 23

New Zealand not insulated

■New Zealand likewise is not immune from the effects that the world recession hason our trading partners. The outlook for our major exports is the worst for years, and our new-found industrial export strength is at present getting a bit of a jolt. However, the clever Budget introduced three weeks ago will do much to keep the

domestic economy on an even keel. Faced with the problem of substantially reducing inflation at a time when business confidence was waning, and demand for tax cuts when there was much to be said — from an economic management point of view — for an increase in over-all tax, Mr Muldoon managed to recon-

cile what seemed irreconcilable. The Budget deficit has been reduced as a proportion of gross domestic product, but over-all taxation as a proportion of GDP is virtually constant, which means that it has increased more, 16.3 per cent against 14 per cent. In spite of considerable

tax relief through the flattening of the tax scales, on the rough figures so far available it would seem that disposable incomes rise only 11.7 per cent. Although the Budget is tight it is likely to halt the erosion of business confidence and will maintain consumer demand — at a lower level than last year.