N.Z.’s $1927M deficit a record

Press, 1 September 1982, Page 1

N.Z.’s $1927M deficit a record

PA Wellington New Zealand had a record current account deficit of $1927 million for the year ended June 30, nearly $lOOO million more than in the previous 12 months, the Government Statistician, Dr J. H. Darwin, announced yester'day. The deficit, represents about 7 per cent of New Zealand’s gross domestic product (G.D.P.). But the $1376M deficit for the year ended June, 1975, was 14 per cent of G.D.P., the highest percentage recorded, Dr Darwin said. The deficit for the three months ended June, 1982, was also a record, at S64IM the. largest quarterly deficit since such figures were first kept in 1965. ■ It compares with a deficit of $297M for the June quarter in-1981, and deficits of

SSBBM, $455M and $243M for the September, 1981, December, 1981, and March, 1982, quarters, respectively. Dr Darwin noted that his figures covered all New Zealand’s transactions with the rest of the world. Reserve Bank figures on overseas exchange transactions cover only dealings involving flows of foreign exchange. In the June quarter exports worth $1917M left New Zealand, a rise of 8.4 per cent on the June, 1981, quarter. Imports in the period rose 24.5 per cent to $1999M, giving a balance-of-trade deficit of SB2M, compared with a surplus of SI63M in the 1981 quarter. It is the first June-quarter trade deficit sincO 1975. New Zealand earnings from services supplied to other countries, and from

investment income, totalled $444M in the June quarter, up 15.9 per cent on the June, 1981, quarter. Debits for services supplied by other countries and . for investment income accruing overseas amounted to $1032M, a rise of 23.3 per cent. That gave a quarterly deficit on invisibles of SSB7M, against $453M in 1981. The Leader of the Opposition, Mr Rowling, labelled the deficit devastating and said the economy was in danger of “sliding completely out of control.” , “Every man, woman, and ‘ child in this country now owes $lBOO to overseas finan- ' cial interests,” Mr Rowling said. The Cabinet should go over the head of the Minister of Finance, Mr Muldoon, and “bring in immediate

measures to make exports more competitive, conserve foreign exchange, and stabilise the flow of imports-... or resign.” The June figures showed that New Zealand was spending $1.22 for every dollar earned. “That ratio has not changed in 6% years of Muldoonism. “The excuse of the second oil shock is gone. Energy prices have stabilised. The boom export years have been squandered. Now, New Zealand finds itself with a falling export market, a weak internal economy and a commitment to further massive overseas borrowing through ‘think big’,” Mr Rowling said. The Associate Minister of Finance, Mr Falloon, said the Government’s monetarypolicy was to “maintain stability in the economy.” “This means keeping a

tight rein on monetary growth commensurate with our anti-inflationary policy and making certain that industry and agriculture have sufficient resources for the development programme in export growth, energy development, and to maintain employment as we go through the transitional stage — until inflation comes down . and major projects start to have a greater effect on internal activity,” Mr Falloon said. The Minister of Overseas Trade, Mr Cooper, said the figures showed the necessity to ensure that the wage-price freeze worked. The freeze would help New Zealand’s exports get to world markets more competitively. “We will work our way through this.” Mr Cooper said. Reserve Bank figures an-

nounced yesterday showed that New Zealand’s current account deficit on overseas exchange transactions in July increased sharply on the July, 1981, figures. The deficit for July was $334M compared with SI2M in July, 1981. For the year to the end of July, the deficit was SIBO9M compared with S7IBM. The bank’s figures said that July’s export receipts at $534M were down 20 per cent on the 1981 figure, but import costs had risen dramatically. Meat, wool, dairy products, and forest products were 42, 14, 25 and 19 per cent lower, respectively, than in July,1981.

Import payments in July, 1982, totalled S6ISM (up 29 per cent), of which $577M (up 27 per cent) was accounted for by the private sector, the bank said.

invisible receipts at SI39M rose slightly (4 per cent) but invisible payments at $393M were 18 per cent higher, resulting in an invisible deficit of $253M, SSSM higher than that registered in July, 1981.

Private capital transactions resulted in a net

inflow of S23M while there was a net inflow of official capital (including I.M.F. transactions) of S34IM, the bank said. For the three months to July, a current account deficit of S7ISM was recorded, $655M up on the July, 1981, quarter. Exports were 7 per cent lower, and imports 29 per cent higher. Difficult market conditions were blamed for the lack of export growth. The result was a S37M trade deficit for the three months to July, compared with a trade surplus of SSO6M in the quarter to July, i9Bl. The invisibles deficit

deteriorated to S67BM from $567M in the July, 1981, quarter. Export receipts for the 12 months to July, 1982, totalled $6601M. up 5 per cent on the previous July . year. Import payments for the year to July were up 21 per cent on the July, 1981, year. Trade transactions showed a ?127M surplus for the year. The deficit on invisibles continued to grow to stand at. $1936M for the July, 1982, vear. Official capital receipts for the year (including I.M.F. transactions) totalled $2449M, while repayments of official debt amounted to SIOO6M.

giving a net official capital inflow for the year of 51441 M. Private capital transactions resulted in a net inflow of S4O4M. Official .overseas reserves at the end of July were SB6IM, compared with $629M at the end of July, 1981. Mr Cooper said last evening that poor prices for New Zealand’s traditional exports and the costs of the Government’s growth strategy were largely responsible for the current account deficit on overseas exchange transactions. The figures should not be, taken out of context, he said. “We are not doing so yyell'

in lamb, mutton and beef, or wool. Until such time as those markets strengthen, we . will have to live with the vicissitudes of the market,” ; he said. Mbre than S2OOM awaited for meat sent to Iran had distorted the figures, but this would come to hand during the “coming months.” ; Among the import costs was the price of at least one , jumbo jet, Mr Cooper said. i Other costs could be ac- , counted for by the growth . strategy. Engineering equipment associated with the , “think big” projects was reflected in the latest figures. [•? PJW.’s comment, page 6