Progress for Aust, economy—Treasurer

Press, 2 April 1985, Page 39

Progress for Aust, economy —Treasurer

NZPA-AAP Canberra Remarkable progress continued to be achieved in restoring health to the Australian economy, said the Federal Treasurer, Mr Paul Keating. Recent economic indicators showed the recovery had broadened to many areas of the private sector and the Government’s goal of sustained, non-inflation-ary growth was in prospect, he said. In a main economic statement to the Economic Planning Advisory Council meeting, Mr Keating: • Expressed confidence about the December quarter national accounts. • Was optimistic that business investment and private consumption would be stronger again next financial year. • The depreciation of the dollar could have beneficial effects on the economy. • Emphasised the Government’s commitment to a firm monetary policy and cuts in its own spending.

Mr Keating said a wide range of partial indicators for late last year and the early months of this year provided “very clear confirmation of the robust state of the economy.” “The broad picture is one of strengthening private consumption and business fixed investment, and continued improvement in labour market conditions,” he said. ’ The indicators showed strong growth in retail sales, motor vehicle registrations, private business investment and the housing sector. The labour market had improved significantly since October and inflation had eased substantially. Budget-time forecasts for domestic activity and employment remained “broadly appropriate” while demand could be stronger than expected. Private consumption growth was likely to exceed the Budget forecast (2.75 per cent), while growth in private investment was likely to be stronger than

the 5 per cent forecast. Budget projections for Gross Domestic Product (up 4 per cent) and non-farm product (5 per cent) were broadly on track. However, Mr Keating said the extent to which the current account deficit had grown was one unforeseen development. “While export volumes have grown strongly, the growth in export earnings has been hindered by depressed world commodity prices," he said. “The growth in imports has outstripped that of exports, reflecting in part the strength of the pick-up in domestic economic activity and unusually high defence equipment imports. “Rising invisibles debits largely reflect improved corporate profitability, higher private sector debt servicing payments and rising freight movements. “As a result, the current account deficit is higher than we would wish. However, the depreciation of the dollar offsets medium-term relief on that situation.”