DOMINION’S OUTLOOK

Taranaki Daily News, 10 June 1931, Page 3

DOMINION’S OUTLOOK

HOPE OF WORLD RECOVERY. { IWMU- 'WH CONFIDENCE IN THE FUTURE The trend of business in New Zealand is surveyed in the latest bulletin prepared by the department of economics of Canterbury College and published by the Canterbury Chamber of Commence. Overseas trade, banking and other financial transactions are closely examTho bulletin says the full effect of the present season’s low prices will be known only when the returns for tho June quarter are available. A substantial further reduction in the value of the year’s exports is, however, inevitable, and comparisons of prices with, values of exports for June quarters or previous years indicate that the valuo of exports for the year ended June next may be in the neighbourhood of £36,000,000. . This means that imports will have to fall considerably, if a favour-, able balance of trade is to be maintain- , ed.- At current prices our exports arc worth probably less than two-thirds their average values in 1928 and 1929, and our expenditure on imports must be curtailed in accordance with our reduced income from exports. It may have to be curtailed much more should it prove impracticable or inadvisable to borrow overseas under.. present circum* stances. • . • With exports about £36,000,000 and no overseas loan money! available, our overseas receipts available for expenditure on imports, after payment of interest due overseas, may bei in the neighbourhood of £28,000,000, or, less than two-thirds of the average foi? 1928 and 1929. (Since this was written the flotation of a Government loan of! £5,000,000 in London has been an-s nounced). : The significance of the bulletins timates is illustrated by the' following summary of trade returns for the last five years? - Year to : June 30 Exports Imports Excess 1926 46,336,'847. .52,107,702 5,820,855* 1927 46,395,082 47,373,687 978,605* 1928 55,619,295 43,497,942 12,121,343 1929.-56,244,750 46,508,009 9,736,741 1930 .’.47,'5'88,213 48,828,077 1,239,864» ■ * Excess of imports. In a general discussion of the outlook, the bulletin says:—“The .present state, of prices and business conditions overseas has been aptly described as ‘bumping on the ‘bottom.’ The general view held .overseas is that the lowest point of the world depression has about been reached, and. though it is anticipated that recovery-may be slow, some . recovery during/ the present year is looked for. The recent fall in the Bank of England rate, the general low level of money rates in overseas countries, the turn in the flow of gold toward Britain, the improvement of bank reserves and the abundance of cheap money, all support the view that the stage is set for the recovery of demand, prices, and of general activity in business in the leading countries. “This does not mean that improve-, ment may be expected immediately in New Zealand. Past experience has shown! clearly how our'internal business con-; ditions vary with.changes in the purchasing power obtained from the sales of our exports. Most of the of the 1930-31 season have now been sold, and the low prices obtained, have effected a drastic reduction of purchasing i power within the Dominion. Improvement in internal business is likely tof j develop only with an increase of purchasing power, which may /be due toi higher export prices, greater volume of exports, or low’er internal prices and! costs. But the effects of higher export! values cannot be • felt until a consider- | able volume of exports is sold at higher? j. prices and this cannot occur at the ear- - liest until the export season of 1931-35 1 is well under way. Meanwhile the production of next season’s exports make heavy calls on our already strait- . .ened finances. “Conditions are, therefore, likely ’ M be difficult during the remainder of the present year. But they should improve early next year if export prices rise,.or; should internal costs be adjusted to present prices.. The ultimate outlook for New Zealand must depend on the natural resources of the country, the ability of the people, and the wisdom exercised in administration. Confidence in these, which means confidence in the future, will help greatly to tide us over the temporary difficulties of the present.” ■ :.•