Economy on ‘steady oath’

Press, 11 December 1989, Page 2

Economy on ‘steady oath’

All the important economic indicators showed New Zealand was on a steady path to recovery, the Minister of Finance, Mr Caygill, said in a statement yesterday. Going in to bat against mounting criticism of the Government’s performance — with more gloom from strong critics, the BERL forecasting group, due tomorrow — Mr Caygill said growth was based on “broad, solid foundations.” “Over the last year, every economic indicator has shown that the economy is on a steady path to growth — not as dramatic as upturns in the past, perhaps, but this growth will

endure.” New Zealand was no longer managed on election cycle boom-bust policies, he said. “There may have been a few knocks to confidence lately,' in reaction to the DFC and industrial problems; and there are many structural adjustments to be worked through,” he said. But he pointed to indicators such as growing imports, continuing strong export prices, growth in new car registrations, and house-building permits as signs of growth. Mr Caygill predicted inflation would be back down under 4 per lent by the end of next year,

once the GST effect was out 01 the figures. And in spite of recent signs of a deterioration, Mr Caygill claimed the balance of payments deficit was steadily improving. Other strong signs were reductions in overseas debt, a 6 per cent fall in interest rates since mid-1987 (1 per cent in the last year), and the likelihood that the Government would meet its Budget targets to reduce the deficit Small falls in unemployment numbers were also signs that strength was returning to the economy, he said.