New Zealand Q4 terms of trade fall to 3-year low

WELLINGTON: New Zealand's terms of trade fell for a sixth consecutive quarter to their lowest level in three years in the fourth quarter as weaker dairy prices weighed on exports and outpaced a fall in import prices, official data showed on Friday.

The terms of trade for the three months to Dec. 31 fell 1.3 percent on the previous quarter, taking the terms of trade to their lowest since the December quarter in 2009.

Economists polled by Reuters had forecast the terms of trade to rise 1.3 percent on the previous quarter, with export volumes falling 3 percent over the same period.

New Zealand's terms of trade have fallen 11 percent since they hit a 37-year high in the June quarter 2011 on strong demand and prices for dairy products. Since then, prices for the country's major agricultural exports have fallen in line with weaker global commodity prices.

The trade weighted New Zealand dollar rose 1.3 percent during the quarter, which would tend to reduce import and export prices.

Terms of trade measure how much imports can be bought by a fixed quantity of exports. A fall in the trade terms means fewer imports can be bought.

Export volumes fell 0.5 percent, having hit a life time high in the previous quarter, driven by a 12.8 percent fall in dairy products, which offset gains in wool and forestry.

Import volumes were down 2.2 percent, driven by a sharp fall in petrol imports. There were also declines in consumption goods, mainly durables, and in intermediate goods such as crude oil. Capital goods, such as machinery and plant, rose 8.3 percent, and there was a strong rise for motor car imports.

The export price index fell 1.9 percent, driven by lower prices for dairy and fish. Import prices fell 0.6 percent on lower mechanical machinery prices, which offset higher petroleum product prices.

Terms of trade for services, such as tourism, rose 2 percent, reflecting higher prices for tourists visiting New Zealand but cheaper travel costs for New Zealanders travelling overseas.

Below is a brief table of key items, revised from figures are in brackets.