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Balance of payments - more bad news for the government

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Senator .Tim Short Shadow M inister for Finance and Shadow M in ister Assisting the Leader on C om m onwealth/State Relations


~ BMP 8/91


Today's December Balance of Payments figures show a 30% increase (in seasonally adjusted terms) in the current account deficit over the previous month's figure.

The result can only be considered as very bad news for the Government.

The deficit reflects a $377 million worsening in merchandise trade and a turnaround from surplus into deficit.

The seasonally adjusted deficit at $1.8 billion, is the highest for 9 months,

$1.8 billion represents virtually no improvement on the corresponding figure 12 months ago despite the sustained downturn in the economy and the official recession, for much of this time.

After the massive collapse in demand in the economy one would have expected major improvements in our current account and trade balance by now.

Merchandise Imports and Exports each moved in the opposite direction to that hoped for by the Government in December.

Imports rose. Despite some fall in previous months along with general demand, there is little sign of any import replacement occurring.

The 7% fall in exports in December is a matter for concern, particularly as the international economic situation gives at best an uncertain climate for exports through 1991.

These figures come on top of months of disastrous economic news for the Government$

- a major blowout In unemployment, with more than 200,000 additional people out of work;

- Job vacancies down 60%;

- Housing, motor vehicles sales and retail sales all down significantly;

- rapidly rising bankruptcies;

- the continuation of high real interest rates;

- a dangerous weakening in fiscal policy, with a massive 50% fall in the projected Budget surplus, and a shift of the Public Sector Borrowing Requirement back into deficit;

- the worsening outlook for the world economy, our exports (particularly agricultural products) and the collapse in rural/farm sector incomes.

The structural adjustment our economy so desperately needs has not occurred.

The engineered recession has not achieved the desired results.

Today's balance of payments figures raise even more serious concerns about the future of the external account when domestic demand eventually recovers from the savaging it is now receiving from this Government's misguided economic policies.

5 February 1991 Melbourne (03)387-4177 ________

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