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Terms of Trade Fall

The merchandise terms of trade fell 4.5 percent in the June 2002 quarter, according to the latest Overseas Trade Indexes released by Statistics New Zealand. This follows a rise of 1.5 percent in the March 2002 quarter. The latest fall in the merchandise terms of trade, which is due to export prices falling more than import prices in the latest quarter, is the largest decrease since a 5.5 percent fall in the December 1990 quarter. A fall in the merchandise terms of trade means that less imports can be funded by a fixed quantity of exports.

Prices for merchandise exports decreased 5.9 percent in the June 2002 quarter and import prices fell 1.4 percent. The fall in export prices is the largest recorded since the March 1958 quarter which fell 6.8 percent. A 5.8 percent rise in the value of the New Zealand dollar in the June 2002 quarter, as measured by the Trade Weighted Index, contributed to the decreases in export and import prices.

Price falls were recorded in most of the export series in the June 2002 quarter with price decreases for dairy products (down 16.7 percent) followed by meat (down 4.6 percent) having the greatest impact. Most of the import series also recorded price falls in the latest quarter; however, these were largely offset by rising prices for petroleum and petroleum products and for passenger motor cars.

The seasonally adjusted merchandise export volume index rose 4.8 percent in the June 2002 quarter, following a 1.6 percent rise in the March 2002 quarter. This is the largest quarterly rise for export volumes since the September 1999 quarter.

Higher volumes for forestry products (up 19.6 percent), dairy products (up 13.0 percent) and meat (up 7.1 percent) were the main contributors to the merchandise export volume rise. Most of the export volume sub-indexes rose this quarter, while the fish and fish preparations volume index was the only major sub-index to fall.

The seasonally adjusted merchandise import volume index rose 3.5 percent in the June 2002 quarter, compared with the previous quarter. Merchandise import volumes have now shown growth for the last three quarters. This last occurred in the June, September and December quarters in 1999. There have been no items valued at $100 million (or more) each this quarter.

However, there was an import of a Seasprite military helicopter valued at over $50 million.

Volume rises were recorded for capital goods (up 18.0 percent), intermediate goods (up 5.1 percent) and consumption goods (up 5.5 percent).

The terms of trade for services rose 3.3 percent in the June 2002 quarter. This was due to import prices (down 4.1 percent) falling more than export prices (down 0.9 percent) in the latest quarter.

Brian Pink Government Statistician END

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