TRADE OUTLOOK

New Zealand Herald, Volume LXXV, Issue 23001, 31 March 1938, Page 14

TRADE OUTLOOK

DANGER OF RECESSION NEED FOR PREPARATION INTERNATIONAL PROBLEMS "There will probably bo some economic recession throughout the world during this year, becoming more marked during the next two years," said Mr. H. I{. Ilodwell, lecturer in economies at Auckland University College, in nil address on the "Economic Situation," given at the Auckland Creditnien's Club luncheon in Milne and Choyce's Reception Hall yesterday. Since the technique of mitigating slumps was better understood now than in 1929, the Dominion could propare to meet this recession wisely and without panic, said Mr. Rodwcll. A proper programme of public works should bo prepared in advance, but should not be put into operation until industrial activity had slackened. If the business decline occurred, the Government should introduce such works and finance them by loans 011 tho open market. Government loans would then provide attractive outlets for bank deposits which tended to rise in times, of trade decline.

"Tho outlook for the world depends u]3on a resumption of stable economic relationships, particularly between the United States, Germany and Great Britain," said Mr. Rodwell. "The future of America is uncertain, but there is room for hope in view of thci proposals for closer economic co-opera-tion between that country and thei United Kingdom.

"The position of Germany is, however, less encouraging. It has long been clear that a resumption of normal trading relationships between Germany and the rest of the world depends upon a devaluation of the mark in sympathy with the movements in sterling, the dollar and the franc. At the present rate of exchange, approximately 12.50 reiclimark to the pound, German prices are about 30 per cent too high." As a consequence, Germany had found it necessary to support its ex--port trade by an elaborate system of subsidies, quota restrictions and special variable rates of exchange, continued Mr. Rodwell. Though normal trade with Germany could not bo resumed until the mark had been devalued, there were serious political and economic obstacles to its accomplishment. In particular, the absence of international faith and goodwill made it seem impossible at present.