Recession knocks exports

Press, 12 June 1986, Page 8

Recession knocks exports

By

MARTIN FREETH

in Wellington

Economic recession has knocked back New Zealand’s export of manufactured goods perhaps far more than expected. Statistics on the volume of manufactured goods other than food exported in the three months to March show a 26 per cent tumble from the previous quarter and an 18 per cent fall from a year before.

The latest figures come after some released last week that showed the value of manufactured exports in the March quarter to be 19 per cent lower than a year before, which is also a reflection of the strong New Zealand

dollar’s impact on returns to exporters.

A fall in aluminium exports from the Bluff smelter in response to a sharp decline in world prices and a strike were significant contributions to the lower volume of exports. The Opposition’s spokesman on trade and industry, Mr Philip Burdon, said yesterday that the over-valued dollar had destroyed the nation’s ex-port-led manufacturing sector. Manufacturers were retrenching and insulating themselves against unpredictable export exposure, he said. The Minister of Overseas Trade, Mr Moore, attributed an over-

all fall of export volumes — 18 per cent between the latest March quarter and the 1985 one — to a reaction by producers to the strength of the dollar last year. However, Mr Moore said that recent surveys of business opinion showed confidence by manufacturers that market prospects would improve later this year. A National Bank business survey disclosed last week that production in the manufacturing sector may have bottomed out.

The Minister of Finance, Mr Douglas, attributed the exports decline also to strikes in the paperboard industry during the March quarter.

The statistics also gave further indication of the downturn in the volume of pastoral product exports. Meat exports were 10.3 per cent down on the volume in the March 1985 quarter. Import volumes in the latest quarter increased 3 per cent on a year before, and 7.3 per cent on the previous quarter. The import figure was boosted by the arrival of Air New Zealand’s new Boeing 767 aircraft in the March quarter. Import price levels rose more than export price levels, resulting in a deterioration of New Zealand’s terms of trade. The terms of trade, how 70, is an index of the purchasing power of ex-

ports in comparison with imports. It slipped three points between the December and March quarters, to be the lowest it has been since 19753 Small rises in export prices for big pastoral exports were a big contribution to the deterioration of the terms of trade. ‘ The meat price level rose 3.7 per cent, and wool, 0.7 per cent, while that for butter actually fell, 4.8 per cent. Mr Douglas said the terms of trade reflected the need for the economic restructuring that Government policies were intended to create. The nation would have been much better off if it had started that process 10 years ago, he said.