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Strong export prices underpin biggest terms of trade rise in 34 years

Strong export prices underpin biggest terms of trade rise in 34 years

The merchandise terms of trade rose 5.9% in the three months to March, Statistics New Zealand says, the biggest increase in 34 years.

The increase came as the price of exported goods rose 10.3%, more than double the 4.2% rise in the price of imported goods. The March quarterly rise follows a 5.8% lift in the three months to December 2009.

A rise in the terms of trade means for each dollar of exports sold, a larger volume of imports can be bought, Statistics New Zealand says.

The rise in export prices was the most in almost 10 years in the March quarter, lifted by  an almost one-third rise in prices for dairy products. Overall Statistics New Zealand said the price of exported goods climbed 10.3% in the three months to March. Prices for forestry products rose 11%.

However, despite the strong rise in dairy prices they are still 25% below the December 2008 quarter peak.

Prices for imported goods rose 4.2% in the quarter, their first increase since the December 2008 quarter. Petroleum and petroleum products, up 9.6%, contributed the most to the overall rise thanks to higher prices for crude oil and motor spirit.


 

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