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BOP deficit won't improve until we tackle imports

24 March 2000

BOP deficit won't improve until we tackle imports

The Green Party today disagreed with Finance Minister Michael Cullen's assessment of the latest balance of payments deficit, saying it won't improve until the government tackles uncontrolled growth in imports.

Statistics New Zealand today announced a December year balance of payments deficit of $8.163 billion. February merchandise trade figures, also announced today, revealed an annual deficit of $3.383 billion.

"Based on the latest trade figures, Dr Cullen has got it wrong if he thinks our balance of payments situation is going to get better," Green Party Co-Leader Rod Donald said.

"While the Te Mana frigate won't appear in the March quarter BOP, the trade figures show a continuing deterioration as the gap between imports and exports widens.

"Dr Cullen is quick to quote export growth of 22.5 per cent in the month of February but conveniently ignores that imports jumped by 25.3 per cent in the same period. More significantly, exports increased by only 7.8 per cent in the year to February while imports shot up by 16.4 per cent.

"The February trade deficit of $3.383 billion is three times New Zealand's worst previous deficit (1985, $1.096 billion; 1975, $1.066 billion) and our second worst as a percentage of GDP (2000, 3.3 per cent est; 1985, 2.8 per cent; 1975, 11.0 per cent).

"While the low New Zealand dollar has increased earnings from tourism, it certainly hasn't quelled our thirst for imported consumer goods.

"Imports of consumption goods have jumped 28 per cent over last February and have increased 35 per cent, or $1.75 billion over the last four years.

"That increase alone represents 35,000 lost jobs as we increasingly import everyday goods which we used to make ourselves.

"Dr Cullen is right that we need to save more and reduce our dependence on overseas borrowing. He also needs to face the fact that unless New Zealanders buy more locally-made goods and reduce our dependence on imported products we will continue to run large trade deficits which flow through to the balance of payments deficit.

"We urge the Labour-Alliance Government to ditch National's fixation with free trade and adopt a 'buy local' strategy, both to get the trade balance back into the black, and to create much-needed jobs in New Zealand," he said.

Ends

Contact Rod Donald: 025 507 183


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