Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


NZ terms of trade reaches new 40-year high in 4th quarter

NZ terms of trade reaches new 40-year high in 4th-qtr as import prices fall

March 3 (BusinessDesk) - New Zealand’s terms of trade rose to a 40-year high for the second straight quarter in the final three months of 2013 as import prices fell more than export prices. On a volume measure, dairy products led exports higher while imports were unchanged.

Terms of trade, which measures the quantity of imports the country can buy with a set amount of exports, gained 2.3 percent in the fourth quarter to the highest level since December 1973, according to Statistics New Zealand. It would need to climb another 3.5 percent to match the all-time high recorded in the June quarter of 1973.

The kiwi dollar recently traded at 83.73 US cents, up from 83.58 cents immediately before the figures were released at 10:45am. The gain in terms of trade exceeded the 2 percent forecast in a Reuters survey.

Export prices fell 0.5 percent, against expectations of a 1 percent gain, while import prices declined 2.8 percent versus a forecast 1 percent decline. That follows an 8.9 percent gain in export prices in the third quarter, led by a surge in milk powder and butter, and gains for forestry and meat.

Dairy export prices fell 1.1 percent in the fourth quarter, the only decline recorded in 2013, while forestry dropped 2.1 percent. Wool prices rose 8.7 percent and meat was up 0.2 percent.

Export volumes rose 9.7 percent, led by a 23 percent gain in dairy products, helping lift the actual value of dairy exports by 27 percent even as prices fell. Meat volumes climbed 5.5 percent, while petroleum products fell 24 percent and forestry volumes were down 0.5 percent. Import volume were unchanged as a 7.8 percent decline for capital goods was offset by a 75 percent jump in petrol and avgas volumes, a 2.1 percent gain for intermediate goods and consumption goods, and a 6.2 percent increase in cars.

The decline in import prices was led by a 3.8 percent drop in mechanical machinery, a 3.7 percent fall for chemicals and a 5.2 percent decline for electrical machinery, with some of the drop attributable to a strong New Zealand dollar, the government statistician said.

“The sky-high terms of trade will provide a key pillar of support to stronger growth in the New Zealand economy this year,” said Anne Boniface, senior economist at Westpac Banking Corp.

“While we don't think the terms of trade can continue to head north forever, we do suspect a good chunk of the recent strength in the terms of trade reflects structural changes in the drivers of New Zealand's key exports - in particular, increased demand for New Zealand's commodity exports from China and other emerging economies,” she said in a note.

The terms of trade for services such as tourism rose 1.5 percent, with a 0.2 percent gain in services export prices and a 1.3 percent decline for imports.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Half Full: Dairy Payouts Steady, Cash Will Be Tight

Industry body DairyNZ is advising farmers to focus on strong cashflow management as they look ahead to the 2015-16 season following Fonterra's half-year results announcement today. More>>

ALSO:

First Union: Cotton On Plans To Use “Tea Break” Law

“The Prime Minister reassured New Zealanders that ‘post the passing of this law, will you all of a sudden find thousands of workers who are denied having a tea break? The answer is absolutely not’... Cotton On is proposing to remove tea and meal breaks for workers in its safety sensitive distribution centre. How long before other major chains try and follow suit?” More>>

ALSO:

Scoop Business: NZ-Korea FTA Signed Amid Spying, Lost Sovereignty Claims

A long-awaited free trade agreement between New Zealand and South Korea has been signed in Seoul by Prime Minister John Key and the Korean president, Park Geun-hye. More>>

ALSO:

PM Visit: NZ And Viet Nam Agree Ambitious Trade Target

New Zealand and Viet Nam have agreed an ambitious target of doubling two-way goods and service trade to around $2.2 billion by 2020, Prime Minister John Key has announced. More>>

ALSO:

Scoop Business: NZ Economy Grows 0.8% In Fourth Quarter

The New Zealand economy expanded in the fourth quarter as tourists drove growth in retailing and accommodation, and property sales increased demand for real estate services. More>>

ALSO:

Scoop Business: RBNZ’s Wheeler Keeps OCR On Hold, No Rate Hikes Ahead

The Reserve Bank has removed the prospect of future interest rate hikes from its forecast horizon as a strong kiwi dollar and cheap oil hold down inflation, and the central bank ponders whether to lower its assessment of where “neutral” interest rates should be. The kiwi dollar gained. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news