Further Fall in Merchandise Terms of Trade
The merchandise terms of trade fell 1.8 percent in the September 2002 quarter, according to the latest Overseas Trade
Indexes released by Statistics New Zealand. The fall in the merchandise terms of trade is due to export prices falling
more than import prices in the latest quarter, and follows a decrease of 4.7 percent in the June 2002 quarter. A fall in
the terms of trade means that less imports can be funded by a fixed quantity of exports.
Prices for merchandise exports decreased 2.8 percent in the September 2002 quarter and import prices fell 1.0 percent.
Export and import prices peaked in the December 2000 quarter, when they were 41.3 percent and 36.4 percent higher
respectively than in the June 1997 quarter. Since the December 2000 quarter, export and import prices have fallen by
14.0 percent and 12.3 percent respectively.
Price falls were recorded in most of the main export categories in the September 2002 quarter, with price decreases for
dairy products (down 12.2 percent) having the greatest impact. Dairy prices are now at their lowest level since the
September 1991 quarter. Most of the import series also recorded price falls in the latest quarter. Lower prices for
imports of textiles, clothing and footwear (down 4.9 percent) and passenger motor cars (down 2.1 percent) were the main
contributors to the fall.
Seasonally adjusted merchandise export volumes showed little change (down 0.2 percent) in the September 2002 quarter.
Lower volumes of meat (down 6.9 percent), fish and fish preparations (down 12.8 percent) and wool (down 12.0 percent)
were partly offset by higher volumes of dairy products (up 4.1 percent) and forestry products (up 5.2 percent).
Seasonally adjusted merchandise import volumes rose 2.3 percent in the September 2002 quarter. Merchandise import
volumes have now shown continuous growth for the latest four quarters. The capital goods (up 3.7 percent), intermediate
goods (up 1.0 percent) and consumption goods (up 4.1 percent) volume indexes all recorded increases in the latest
quarter, with consumption goods volume being the main contributor.
The terms of trade for services rose 0.7 percent in the September 2002 quarter, recording the fourth consecutive
increase. This was due to import prices (down 2.7 percent) falling more than export prices (down 2.1 percent) in the
latest quarter.
Brian Pink
Government Statistician