Fast Facts

Terms of trade reach new record

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New Zealand’s terms of trade rose 0.7 percent in the September 2017 quarter to reach an all-time high, Stats NZ said. The latest increase was due to import prices falling more than export prices.

Terms of trade is a measure of the purchasing power of New Zealand’s exports abroad and an indicator of the state of the overall economy. The 0.7 percent rise in the September2017 quarter means New Zealand can buy 0.7 percent more imports for the same amount of exports.

“The terms of trade increased over the last year, driven by high meat and dairy prices, especially butter, to reach the highest level since the series began in March 1957,” international statistics senior manager Daria Kwon said. “The previous high for the terms of trade was the June 1973 quarter.”

The new high in the terms of trade echoes the impact seen in the early 1970s, when prices also rose for dairy and meat, as well as wool. However, the early 1970s’ boom for export prices was short-lived. New Zealand’s terms of trade fell after key export market Great Britain joined the European Economic Community, and the first big oil crisis pushed up fuel prices sharply in late 1973.

Source: Stats NZ

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