Trade terms at 10-year low

Press, 4 December 1985, Page 41

Trade terms at 10-year low

Wellington reporter New Zealand’s overseas terms of trade have fallen to their lowest level in 10 years. The terms of trade index, measuring changes in New Zealand’s international purchasing power, declined to 71 in the September quarter, which is the lowest it has been since the December quarter of 1975. The latest quarter’s decline is by one point since the June quarter and three points since the March quarter. Figures from the Department of Statistics, which compiles the index, show the decline results from export price levels falling faster than import trade levels. The overseas terms of trade indicate the quantity

of imports which can be bought by a fixed quantity of New Zealand’s exports. The September quarter figures show a 4.9 per cent drop in the level of export prices compared with a 3.5 per cent fall in import prices. Among categories of goods exported from this country, meat had the biggest price drop, of 7.6 per cent, in the September quarter of the department’s export price index. The volume of exports was steady between that quarter and the previous one when measured by the export volume index, adjusted for seasonal effects. Electrical machinery made the biggest contribution to the decline in import prices. Import volumes increased during the September quarter 3.5 per cent.