Export earnings boost current account balance

Press, 10 August 1985, Page 8

Export earnings boost current account balance

By

MICHAEL HANNAH

in Wellington Huge increases in earnings from dairy and manufactured exports with bigger capital flows have made a significant improvement in New Zealand’s current account balance. The overseas exchange transactions current account, which measures New Zealand’s trade with the rest of the world, showed a substantial improvement in June, according to figures released yesterday by the Reserve Bank. The country was still left $2573 million in deficit on its current account for the year to June, but this was down on the $2889M deficit recorded in May. Transactions in June resulted in a current account deficit of SB9M for the

month, well down on the $349M deficit shown in May, and on the S4O6M deficit recorded in June, 1984. Official overseas reserves also showed an improvement of S3B6M in June, and stood at $2879M at the end of the month. The figures were released with a cautionary note that they were only broad indicators of trends, particularly since the removal of exchange controls in December, last year, which gave exporters and importers more flexibility in moving money offshore. But they point to substantial improvements in earnings from dairy products and manufactured goods, with less promising returns from meat, wool and forestry exports. In June, dairy receipts amounted to $221.8M, com-

pared with $95.1M in receipts for the same month a year earlier. The rise of 133 per cent can be explained only partly by the devaluation which occurred in July, 1984. Manufactured export earnings were $166.1M last June, compared with SII6M in June, 1984, a rise of 43 per cent. Meat receipts were down from $190.4M in June, 1984, to $162.6M last June, and wool earnings rose from $80.2M to SIOIM this year. Forestry returns dropped from $44.9M in June, 1984, to S33M this year. Similar trends showed in the annual figures, but some comparisons have to be read cautiously because of the timing of the devaluation last July. Government borrowing improved the country’s re-

ceipts, with a rise of monthly borrowings from $155.7M in June, 1984, to $319.3M last June for Government borrowings, and a rise from SIIB.IM to $337.7m in private borrowings. The comparison was even starker for annual borrow- ; ings, however, showing a rise from $1947.5M to i $4714.8M in Government , borrowings for the June I years 1984 and 1985, respeci tively. Private borrowings for I the same period showed a , similar trend, with a rise from $1225.2M to $5096.8M i ’ in 1984 and 1985, respec- • tively. > Debt repayments also f rose strongly, however, Gov- • ernment debt repayments rose from $322.8M in the ; June, 1984 year, to $3199.5M in the June, 1985 year.