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 per cent in the fourth quarter to the highest level since December 1973, according to Statistics New Zealand. It would need to climb another 3.5 per cent to match the all-time high recorded in the June quarter of 1973.
The sky-high terms of trade will provide a key pillar of support to stronger growth in the New Zealand economy this year.
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 per cent forecast in a Reuters survey.
Export prices fell 0.5 per cent, against expectations of a 1 per cent gain, while import prices declined 2.8 per cent versus a forecast 1 per cent decline. That follows an 8.9 per cent gain in export prices in the third quarter, led by a surge in milk powder and butter, and gains for forestry and meat.