DOMINION RECOVERY

Poverty Bay Herald, Volume LXIII, Issue 18988, 13 April 1936, Page 5

DOMINION RECOVERY

THREE DISTINCT STAGES MORE INTERNAL BUSINESS 3 "New Zealand's credit situation and the exiernal trading position presage a continuation, with increasing momentum, of the internal business upswing," stales the latest Abstract of Statistics in a review of business conditions. The .journal stales that the recovery in the Dominion has passed through two distinct stages, apart from the present situation. The tirst stage Of recovery was the pronounced improvement in the 1933-34 export season from a definitely bad external trading situation, mainly through the agency of. a phenomenal rise in wool ;nires. Internal 'business activity reiiiitnod at slump levels. - The second stage was the marked upswing late in 1934 and early in !!i:i."i in internal business activity, in lie face of a deteriorating—(hough till basically sound—external trading situation. The excess of deposits :.ver advances with the trading hanks .onched high levels in 1034, tiie ratio of advances to deposits being as low as .■>!>,.!);> per cent in August, 1934, a "lag" iii the response of investment activity to the improved business it nat ion thus being evident. Late in 1934 imports commenced a definite upward trend, which still continues, in the early months of 193 n the increase in imports, combined with the lowered realisations for exports, a onsequeneo of.the fall in wool prices-, ■.-.-. as reflected in an increase in the ratio of bank advances to deposits, advances rising while deposits fell - somewhat. After May, 1935, a material diminution tool; place in the abnormally large overseas funds of New Zealand banking institutions. MORE HA LA >.'<'!■:D The third and present slage of rcovery is more balanced than either of the two preceding stages. The salient features of the present sit union are the continuation of the improvement in internal business activity, and an improved external trading situation, with promise of future betterment. A mild boom in building activity and a corresponding Material increase in mortgage and land transfer business are apparent. While recent hanking Statistics- re veal an improved ratio of advances to deposits as compared with the position of 1934, total deposits with the trading banks have now touched .ccud levels, ami overseas funds of *V.v Zealand bank, have increased—ihough not lo the hieii lev.-Is of the . arly mouths oi 1935." will, ihe tin 1. id" ihe exporting season ,-ii hand, a high level of hank deposits and an increase in overseas funds are lo In expected, and there will probably be some diminution in both in the laic: rutinllis of the year. Nevertheless, the present high level of liquid funds, :; phenomenon by no means peculiar to New Zea.kind, suggests that a cautious

iititude towards new investment still uevails—-an aftermath of the caution mgendered bv the difficult period bcweon 1930 and 1933.