The Evening Star. TUESDAY, MARCH 19, 1929. THE ECONOMIC OUTLOOK.

Evening Star, Issue 20128, 19 March 1929, Page 8

The Evening Star. TUESDAY, MARCH 19, 1929. THE ECONOMIC OUTLOOK.

“ The outlook for business in 1020 cannot hut be regarded as good—decidedly better than for any year since 19255’ So states the March bulletin of the Christchurch Chamber of Commerce, issued in conjunction with the economics department of Canterbury College. Nor arc any “ huts ” appended to this optimistic, .statement, which follows a resume ot the trade, banking, and other statistics available for the year ending December 31. This saw a balance of exports over imports of £11,300,000, due largely to the fact that the 1928 export figure constituted a record —over £56.000,000. At the same time imports were only slightly higher than in 1927. There were indications, however, in December a ml January that imports had commenced to increase. A satisfactory aspect of improvement in exports is that about half of it was due to the greater production. That increased prosperity often spells motor cars is seen by the fact that the number of motors imported increased from 13,107 in 1927 to no fewer than 18,787 in 1928. This, with a new emphasis in the demand for apparel, seems to have spelt a “ tailing demand for housing, sweets, stimulants, and narcotics.” The banks’ returns again show that their funds have continued to increase, with the result that these are larger than in any December quarter since 1920. The neb result is that purchasing power in the dominion may now be said to be higher than at any time since the postwar boom, and it is still expanding. The fact still remains, however, as noted three months ago, that business activity lias displayed no increase parallel to the expansion ot funds available. ’The public—as is revealed by a table comparing tree and fixed deposits over a number of years—is placing a much greater proportion of money on lixed deposit, instead of using it tor active trading purposes. Since 1924 fixed deposits have increased by nearly £10,000,000, while free deposits have decreased by £2,500,000. This can only indicate a lack ot confidence by the holders of money in the prospects of the investments offering. The bulletin points out, however, that the present trend cannot continue indefinitely, and it may bo cheeked by the rate of interest being reduced, unless people prefer to export capital for investment abroad. Other business indicators, such as the steady increase in pastoral production and in the tonnage carried by the railways, point towards prosperity; there is also definite evidence of recovery in urban business. On the other hand, mortgages registered were a little less, building permits continued a slow decrease, and unemployment is slightly greater than a year ago. it is considered that these factors arc due to the slow way in which trade prosperity permeates the community. This should not, however, be further delayed. “ If the developments of past cycles are repeated, as appears probable with the abundance of funds now available for spending, a bolder outlook may succeed the caution that has marked the last two years. Growing demand might then , stimulate greater business activity, leading to more rapid circulation pf money and to fuller cm ploy -

ment, and so expansion ini glib gatlici way.” Returning to the question of the present low level of confidence in business, a reason is offered lor this in the tendency for the general level of prices throughout the world to fall (even though wc have done so well with our exports this season) ; and it is suggested that New Zealand local costs and prices have tailed to accommodate themselves to the downward trend of world prices. The cost of living, for instance, is still C2 per cent, above the 1914 level, though export prices arc only 52 per cent.; wholesale prices 41 per cent, and import prices only 36 per cent, above that level. This seems an extraordinary state of things, and it is a pity the position is not elucidated further, So the bulletin concludes by stating that there is little prospect of real recovery aiu( permanent expansion in local business until costs arc adjusted to the prices which the local market can afford to pay and a secure return emerges sufficient to attract new investment into business, though it is also pointed out that the bringing down of costs of production must be done -without lowering the standard of living of the workers, as measured by real wages in the form ol goods and services.