asked the Minister for Finance if he will make a statement concerning the import excess of £1 billion in the year ended May 1979 together with the forecast by the Central Bank of a balance of payments deficit of £380 million for 1979 compared to an estimated deficit of £133 million for 1978 and the action proposed to meet this serious situation.
Written Answers. - Balance of Payments Deficit.
82.
In the 12 months to May 1979 merchandise imports increased by £843 million, compared with the 12 months ending May 1978. Of this increase £624 million, or approximately three-quarters, was accounted for by materials for further production and producers' capital goods. Producers capital goods showed the biggest proportionate increase by far, being up by over 40 per cent in value. The increase in industrial exports was strong but the performance of agricultural exports reflected supply constraints arising from considerable cattle disposals in earlier years and delayed marketing of cattle as a result of a late spring.
The large increase in imports of investment goods will widen the productive base of the economy and contribute to further industrial expansion, particularly on the export front, and to job creation. The growth in imports of materials for further production is partly accounted for by the increase in industrial exports and partly by the increase in personal consumption over the period.
The growth in the import excess underlines the need to maintain, and if possible improve, our competitiveness on home and export markets and to give maximum support to the Guaranteed Irish campaign. The action being taken by the Central Bank in regard to its credit guidelines and the upwards adjustment in interest rates should have a beneficial impact on the balance of payments deficit. It was pointed out in the White Paper "National Development 1977-80" that the current deficit in the balance of payments could be expected to increase with fast economic growth and that continuous monitoring of the external situation would be necessary so that corrective action could be undertaken if developments proved more adverse than anticipated.