Aust’s deficit

Press, 16 April 1986, Page 46

Aust’s deficit

By AAP correspondent lan Pemberton, through NZPA Canberra The Australian Government’s reliance on the depreciation as a major arm of economic policy has again been challenged with the release of statistics showing a March current account deficit of more than sAustl billion (SNZI.3 billion).

The Australian Bureau of Statistics figures show that the current account deficit rose sAust44 million ($NZ57.2 M) in March to $1.02 billion (SNZI.32 billion), but failed to give any clear sign that the dollar’s depreciation was having a favourable impact on the economy.

The deficit, appears destined for a record annual level of more than sAustl3 billion (SNZI6.9 billion) this financial year. With nine months gone, the currentaccount deficit was only $lOO M) less than the 1984/85 record of $10.5 billion.

According to the J-curve depreciation theory, which has the firm support of the Treasurer, Mr Paul Keating, last year’s sharp fall in the value of the dollar should have re-invigorated export and import-competing industries and should result in a gradual reduction in the current account deficit by late 1986. The trade deficit rose in March by $2B million to $221 million exports rising by 2 per cent and imports by 3 per cent.

However, the March import figure was boosted by the Qantas purchase of two aircraft valued at S2IOM.

Imports and exports both fell 3 per cent on a seasonally adjusted basis. The Industry, Technology, and Commerce Minister, Senator John Button, told Parliament the balance-of-payments figures were "not as satisfactory as the Government would wish,” and said he did not hold out great hopes\about a fast and positive irfipact based on the Jcurve.