8.—16

A comparison of the yearly values of exports and imports shows that from 1932 to 1937 (inclusive) the average annual excess of exports over imports was approximately £(N.Z.)13,000,000, whereas the excess of exports in 1938 was less than £(N.Z.)7,000,000, and in 1939 was £(N.Z.)3,500,000. The actual amounts are as follows : — Excess of Exports over Imports. (000 omitted.) Year ended 31st March, £(N.Z.) 1932 .. .. .. .. .. ..9,182 1933 .. .. .. .. 12,451 1934 .. .. . . .. .. 19,907 1935 .. .. .. .. 12,350 1936 .. .. .. .. .. .. 12,236 1937 .. .. .. .. .. .. 12,613 1938 .. .. .. .. .. .. 6,943 1939 .. .. .. .. .. .. 3,459

Business Activity. Though the upward movement of business activity, which had been a notable characteristic of the previous four years, was checked by the reduction in external trade, there was no evidence of any considerable recession in the general level of activity, as is indicated by a comparison of the figures shown below: —

Commodity Prices. The table of price comparisons given below shows that prices generally, and more particularly the export and wholesale groups, were steadier during the year ended 31st March, 1939, than they were during the previous year. The export price index number for March, 1939, was slightly below the level for March, 1938. Wholesale prices, influenced mainly by variations in the prices of locally produced goods, fell slightly from March, 1938, to September, 1938, rose thereafter, and at the end of March, 1939, were about 1| per cent, higher than they were a year previously. Retail prices have been fairly steady during the greater part of the year, but have shown a rising tendency, more especially since November, and finished the year approximately 3 per cent, higher than at the beginning of the year.

Commodity Price Index Numbers.

General Review. The developments outlined earlier in this report reveal that not only did general business activity and the demand for imports continue at a high level in spite of the reduction in the total value of exports and a considerable net outflow of capital, but that, notwithstanding the expansion of credit represented by the increase of over £14,000,000 in Reserve Bank accommodation to the State (including the increase of £2,300,000 in advances to the Primary Products Marketing Department), commodity prices remained relatively stable throughout the year. Now that the surplus sterling reserves have been practically exhausted, however, and the Reserve Bank has been relieved of the obligation to pay its notes in sterling, a different situation presents itself.

6

Year ended 31st March, -Percentage. Increase or 1938. 1939. Decrease. (£(N.Z.) millions.) Trading bank debits (excluding Government) .. 957 • 2 j 937 -5 — 2-1 Note circulation (weekly average held by public).. 9-131 i 10-364 +13-5 Sales tax .. .. . .. 3-519 J 3-572 + 1-5 i

Export. Wholesale. Retail. 1937-38. 1938-39. 1937-38. 1938-39. 1937-38. 1938-39. (Base : 1909-13 = 1000.) April .. 1401 1343 1481 1519 1550 1612 May .. . . 1463 1389 1502 1514 1566 1620 June .. .. 1454 1390 1514 1517 1564 1620 July .. .. 1441 1360 1512 1508 1569 1618 August . . 1451 1329 1525 1513 1579 1622 September .. 1459 1380 1524 1506 1591 1618 October .. 1486 1354 1529 1512 1598 1624 November . . 1563 1377 1564 1518 1613 1624 December .. 1456 1345 1565 1547 1620 1651 January .. 1408 1329 1533 1546 1606 1646 February .. 1351 1342 1528 1540 1606 1652 March .. 1345 1330 1522 1548 1605 1647