Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, FRIDAY, MARCH 10, 1939. OVERSEAS TRADE

Poverty Bay Herald, Volume LXVI, Issue 19884, 10 March 1939, Page 4

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, FRIDAY, MARCH 10, 1939. OVERSEAS TRADE

In view of the exchange control system, involving as it does the regulation by the State of all imports and exports, more than usual interest attaches to the returns of the Dominion’s overseas trade for January. Since the restriction of imports did not apply to goods ordered prior to December 5, the January returns would not be affected to any considerable extent, but they provide, nevertheless, an indication of general trade trends. They make possible, also, a comparison with the trade figures of Australia, where conditions. are analagous to those of'the Dominion. The January figures confirm the trend that has been apparent for some time —a steady decline in the value of exports and a reduction, on a lesser scale, of imports. Exports in January were valued at £6,211,000, the lowest January return since 1936, while imports were valued at £4,723,000, a drop of £BOO,OOO on last year, but still slightly more than in January, 1937. The excess of exports for the month was just under £1,500,000, this being a drop of £400,000 compared with last year and of more than £1,000,000 compared with January, 1936, and the figure being the lowest for the month in any year since 1933, when the excess of exports was only £IO,OOO less than this year.

Owing to seasonal and shipping variations, one month’s figures cannot be accepted as a reliable guide, but if the examination is extended to cover the first seven mouths of the current production year the position is still

less reassuring. Exports for that period were valued at £23,500,000 compared with more than £32,000,000 for the corresponding months of last year, a decline of more 'than £8,500,000. The export income for the period was, in fact, the lowest since 1934-35, and represented an increase of only £BOO,OOO on the slump year of 1933-34. Imports, however, do not fully reflect this contraction in overseas credits, but at £28,270,000 for the seven months they show a drop of £7,747,000 when compared with the previous year, but are still £12,500,000 more than for 1933-34. The deterioration in the position is best indicated by the trade balance. In the first seven months of 1933-34, there was an excess of exports of just under £7,000,000, but in 1938-39 there was an excess of imports—an unfavourable balance —of £4,720,000. Aggregating the seven-monthly figures, it is found that for the three years ended 1935-36 there was a favourable balance of more than £9,000,000, but for the three years ended 1938-39 there was an unfavourable balance of almost exactly the same amount. Here, then, is a clear explanation of the decline in overseas funds.

To some extent, the experience in Australia has been similar. There, 1 also, there has been a substantial decline in exports, a return of £58,000,000 for the seven months being more than £5,000,000 lower than for the corresponding period of the previous year. On the import side, however, the Australian position is much more satisfactory than that of New Zealand, because during the period that exports declined by £5,000,000 imports were reduced by nearly £7,000,000. For the seven months Australia had a favourable trade balance of £6,728,000, whereas New Zealand had an unfavourable one of £4,720,000. More than that, the position in Australia this year showed an improvement of £2,400,000 compared with last year, while in New Zealand the adverse balance was increased by more than £BOO,OOO. The interesting feature of these comparisons is that Australia, without any intervention by the State and relying solely on natural processes, has considerably improved her trading position, whereas in New Zealand it has been deemed necessary to impose the most rigid restrictions on the people’s expenditure in an attempt to effect an adjustment. What the effect of these restrictions will be remains to be seen, but to the end of January imports had not declined to the same extent as exports, and for the month of February customs collections, and presumably imports, showed an increase over the same month of last year.

From New Zealand’s point of view the most serious aspect is that exports are continuing to decline just at a time when the country is committed to heavy increases in expenditure. For a time it was possible to hope that the unfavourable trend was only temporary, but the position must be faced that there is no prospect of an early recovery. In the first place, there is an apparent reduction in nearly all important branches of production, and on top of this wool and meat prices have continued to decline, restrictions have been placed on meat exports to Great Britain, and the dry summer threatens a further serious drop in dairying production. There is no consolation in the fact that Australia has had an almost identical experience, being affected in the same way and to the same extent by overseas market conditions and having the added disabilities of serious droughts and devastating bush fires. There is a striking contrast, however, in the fact that the Australian trading position has automatically adjusted itself whereas in New Zealand it has gone from bad to worse. Basically, however, the position of the Dominion is still infinitely better than it was, but it is becoming increasingly clear that unless steps are taken to make the expenditure in every direction conform more closely to the reduced income the difficulties of the future will be greatly accentuated.