Data Flash (New Zealand)
Key points
Export prices fell by 0.6% qoq while import prices fell by 1.7% qoq. The market had expected declines of 1.3% qoq and
1.0% respectively.
In each case, a marginally stronger NZD contributed approximately 0.5pps to the decrease. A fall in the prices received
for exports of non-food manufactures was partly offset by increases in most other exported commodities. Lower prices for
petroleum and petroleum products contributed 0.7pps to the fall in import prices.
The merchandise terms of trade rose by 1.1% in Q3. The terms of trade have risen 6.1% over the past year and 12.5% since
early 2000. Export volumes increased by 0.4% qoq. Increased exports of non-food manufactures and foretsry products were
partly offset by lower exports of pastoral and dairy product.
Import volumes declined by 1.4% qoq. The volume of consumption goods fell 4.2% qoq. However, the volumes of imported
intermediate and capital goods rose by 3.8% qoq and 3.6% qoq respectively. The terms of trade for services fell by 0.6%
qoq, reflecting a 1.6% fall in export prices and a 1.1% fall in import prices.
Comment
Today's data confirms that external price pressures are beginning to ease. Going forward, both export and import prices
are expected to moderate further reflecting the impact of continued global weakness on the prices of New Zealand's
agricultural commodity exports, lower oil prices, and an expected appreciation of the NZD. While a further small rise in
the terms of trade may be recorded in Q4 (due to the impact of steeply lower oil pries), we expect the terms of trade to
decline substantially over 2002, moderating the demand stimulus the New Zealand economy has received from external
sector income over the past year.
Export volumes were marginally stronger than we had expected while import volumes were marginally weaker. Incorporating
this information into our estimate of growth in the expenditure-based measure of GDP, and allowing for conceptual
differences, has brought this estimate into line with that derived separately for the production-based measure
(previously our estimate of expenditure GDP was running a little below our estimate of production GDP). Therefore, in
advance of tomorrow's manufacturing survey - the last major indicator prior to the Q3 GDP release on 21 December - our
preliminary estimate of Q3 GDP growth remains 0.5% qoq.
Ends