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August balance of payments



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TREASURER

EMBARGO

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PRESS RELEASE NO. 88.

STATEMENT BY THE TREASURER, THE HON P.J. KEATING, MP

AUGUST BALANCE OF PAYMENTS

Today's Balance of Payments figure in seasonally adjusted terms of $2257 million is at the upper end of market expectations.

In original terms the deficit was $2580 million.

It reflects to a large degree the continued strong level of imports in machinery, transport and manufactures - imports which will in time turn the current account.

As outlined in the Budget papers the current account deficit will continue to show a higher figure during the first half of the year. " ยท

But the current account deficit is unsustainable high and, there is no scope for relaxation of current tight monetary policy.

The sharp rise in imports of 13 per cent was also affected by the fact that August is a seasonally high month for imports, and there were more trading days in August than in July - 23 compared to 21.

Import values are also being boosted by the price effects of the previous depreciation of the dollar and by higher world inflation.

A breakdown of the import figures shows the largest contribution came from transport equipment (9 percentage points), machinery (4.4 percentage points) and manufactures (3.5 percentage points).

Indeed, one-off transport imports such as the Qantas 747 and a LNG tanker contributed some $300 million to the increase in the month.

COMMONWEALTH PARLIAMENTARY LIBRARY MICAH

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It is these imports, ordered some time ago, which will contribute directly and significantly to Australia's future export performance.

The fundamental shift in fiscal policy - which produced a $9.1 billion surplus in the 1989-90 Budget - combined with an effective wages policy means the economy is now as robust as it has been this decade.

Nonetheless, monetary policy must remain tight until the Government believes there is an unambiguous downward trend in demand and the current account.

The August figure also underscores the imperative of ensuring that the pilots current wage claim is not successful.

CANBERRA 21 September 1989