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NZ first-quarter terms of trade fall as weaker commodity prices weigh on exports

NZ first-quarter terms of trade fall as weaker commodity prices weigh on exports

New Zealand's terms of trade fell in the first three months of the year as a decline in commodity prices weighed on exports, with dairy prices falling for the third straight quarter even as volumes rose.

The terms of trade, which measures how much imports can be bought with a fixed quantity of exports, fell 2.3 percent in the three months ended March 31, according to Statistics New Zealand. That’s a smaller decline than the 3 percent forecast in a Reuters survey. Export volumes fell 0.6 percent against an expectation of a 0.7 percent increase, while export prices dropped 3.8 percent

Prices of dairy products fell 5.6 percent in the first quarter, making the biggest downward contribution to the terms of trade. The fall follows a slide in prices in Fonterra Cooperative Group’s GlobalDairyTrade sales this year which prompted the world’s largest exporter of dairy products to cut its forecast 2012 milk price payout and flag lower payments in 2013.

Fruit export prices fell 7.3 percent, mainly reflecting weaker prices for apples. Forestry products fell 4.2 percent and meat declined 3.6 percent.

Import prices fell 1.5 percent in the first quarter, less than the 2.1 percent drop forecast by economists and helping offset the slide in export prices. Prices of transport equipment imports fell 2.3 percent in the March quarter, leading the decline. Mechanical machinery import prices fell 1.8 percent and electrical machinery dropped 2.6 percent.

Terms of trade for services rose 1.8 percent.

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What else would you expect when the RBNZ is determined to support a nation of shopkeepers with the emergency level interest rate policy, thus enriching the importers and the likes of GE Money.


Relative to the UK, USA, Canada our OCR is still very very high. Imagine nz now with an ocr of 4.25 - it would be far worse.

The lower interest rates fall the greater the idotic outcomes caused by malinvestment.

Hey didn't Bill English promise an export recovery...170ooo new productive export based jobs!...what a load of *&^%....
Welcome to the real world Bill English...a world where the fed money scam has failed...where falling commodity prices reflect the true ^%$# state of the worlds economies....
Watch now as rural earners slam shut their wallets...downturn in the rural regions set to gether pace.
We know something is wrong because every mile or so the roads are being ripped open and new gravel and tar is spewing anywhere will do.