Terms of Trade Rise in March Quarter
The merchandise terms of trade rose 1.7 percent in the March 2003 quarter, according to latest Overseas Trade Indexes
released by Statistics New Zealand.
This is the first rise since the March 2002 quarter and is due to import prices falling more than export prices. An
increase in the terms of trade means that more imports can be funded by a fixed quantity of exports.
Prices for merchandise exports decreased 2.7 percent in the March 2003 quarter and import prices fell 4.4 percent. These
falls were influenced by a 7.2 percent rise in the value of the New Zealand dollar in the March 2003 quarter as measured
by the trade weighted index (TWI).
Price decreases for forestry products (down 6.6 percent), meat (down 4.0 percent), and fruit and vegetables (down 12.0
percent) were the main contributors to the fall in export prices in the March 2003 quarter.
Dairy prices fell a relatively small 0.9 percent, limiting the size of the overall fall in export prices. Price falls
were recorded in most of the import series, with lower prices for mechanical machinery (down 6.7 percent), transport
equipment (down 4.6 percent) and electrical machinery and apparatus (down 8.4 percent) having the greatest impact.
Seasonally adjusted merchandise export volumes rose 1.9 percent in the March 2003 quarter following a 1.5 percent
increase in the December 2002 quarter.
The main contributing sub-indexes were meat (up 11.2 percent) and non-food manufactures (up 1.4 percent), which were
partly offset by a fall in dairy product volumes (down 3.9 percent). Seasonally adjusted merchandise import volumes fell
1.0 percent in the December 2002 quarter, following sustained growth in the previous five quarters.
The largest contributor to the fall was the intermediate goods index (down 3.3 percent) largely due to a decline in the
total parts and accessories sub-index.
The volume of capital goods and passenger motor cars also fell this quarter, down 24.9 percent and 8.7 percent
respectively. Partly offsetting these was a 3.9 percent rise in consumption goods volumes.
The terms of trade for services rose 5.9 percent in the March 2003 quarter, recording its sixth consecutive quarterly
increase. This was due to import prices falling 5.8 percent while export prices were flat (down 0.1 percent) in the
latest quarter.
Brian Pink
Government Statistician