New Zealand's terms of trade fell more than expected in the third quarter as petroleum products drove up import prices, outpacing a gain in export prices that was led by meat.
The merchandise terms of trade fell 3.7 per cent in the third quarter, following a gain of 1.5 per cent three months earlier, Statistics New Zealand said. A decline of 2.8 per cent was expected for the third quarter, according to a Reuters poll. The terms of trade is a measure of the purchasing power of New Zealand's exports, and the decline means 3.7 per cent less imports of goods could be funded by a fixed quantity of exports compared to the June quarter.
The nation's terms of trade reached a 40-year high last year as the kiwi dollar climbed above 88 US cents, making imports cheaper and offsetting the impact of falling commodity prices. Since then the currency has retreated to trade recently at 65.84 cents. The trade-weighted index fell 8.4 per cent in the third quarter, the biggest decline since 2008, which drove up both import and export prices, the government statistician said.
The value of exports rose 6.5 per cent to $12.3 billion in the third quarter from three months earlier, as volumes rose 3.7 per cent and prices gained 3.4 per cent. Meat export prices rose 8.1 per cent to a record high in the third quarter, driven by beef prices, while volumes climbed 9.8 per cent. The value of meat exports rose 16 per cent to $1.9 billion. Prices, volume and value of beef exports all reached a record in the latest quarter, while lamb also rose on those three measures.
Forestry product export prices rose 7.5 per cent, while the volume fell 1.2 per cent. The value of forestry exports rose 5.2 per cent. Dairy export prices fell 0.1 per cent in the quarter, while the volume rose 11 per cent and the value gained 9.7 per cent.
