EXCESS OF IMPORTS

Evening Post, Volume CXI, Issue 121, 22 May 1926, Page 7

EXCESS OF IMPORTS

AND THEIR EXPECTED DECLINE

STRINGENCY IN1 LATTER HALF

OF YEAR,

According to an estimate and statement prepared by the Department of Economics of Canterbury College, export values for the year ended 30th June, 1926, will be at least nine millions lower than export values for the year ended 30th June, 1925 —that is, assuming that the quantities exported for the first-mentioned year are the same as for the preceding year, and that December prices rule.

The department remarks that an unfavourable trade balance —tlio excess of imports for tho year ended 31st March, was over four millions —similar to that now facing New Zealand, but greater, "was the main cause of the disastrous slump of 1921. Then the net excess of payments made by the Dominion amounted to about £26,----000,000. During the coming year we are faced with the prospect of meeting an excess of payments made by us which will probably approximate at least £9,000,000. . This points to a credit stringency and a depression, probably in the latter half of the present year, which promises to be similar in character but less in severity than that of 1921-22. To some extent its intensity will depend \ipon public borrowing abroad; to a much greater extent upon the trade balanco during the next few months. It will be less severe if imports fall off rapidly or if export prices should rise; it will bo more sovero if imports are not reduced or if export prices should fall still further." ' It is pointed out that an unfavourable trade balance means a reduction of internal purchasing power, a lessened activity of business, and a docrease of consumption that will leave stocks of imports in the hands of traders, and so bring about the curtailment of imports which redresses tho balance. "The fact that no significant change has occurred during tho year in the Now Zealand wholesale price index indicates that the effect of falling export prices has not yet been seriously felt by the Dominion in general. But the effect of this fall is bound to be passed on through the primary producers, who feel its impact most, to tho country as a whole." According to the department's estimate, tho nine millions fall in export values will be only £100,000 in dairy produce, but in wool it will bo G millions, in meat 2| millions.