N.Z. terms of trade continue to improve

Press, 5 April 1989, Page 37

N.Z. terms of trade continue to improve

PA Wellington New Zealand’s overseas terms of trade reached a nine and a half year high in the December quarter. The terms of trade index, measuring the changing quantity of imports which can be purchased by a fixed quantity of exports, rose 2 points to 88 in the quarter. The Minister of External Relations and Trade, Mr Moore, said the terms of trade were continuing to move in New Zealand’s favour. New Zealand could experience a current account balance in the near future because exports had increased and imports fallen, together with the improved terms of trade, he said. The latest increase was because of export price rising 7.3 per cent during

the quarter, and import prices gaining 5.3 per cent, the Statistics Department said. The December quarter terms of trade index is the highest recorded since the June, 1979, quarter, when the index was 91. Export commodities showing the largest price level increases from the September 1988 to the December 1988 quarters were . casein, 28.1 per cent; milk and cream, mainly milk-powders, 20.3 per cent; and wool, 12.8 per cent. Lesser increases were recorded for cheese, 11.9 per cent; butter, 11.7 per cent; wood, 10.4 per cent; and meat, 9.5 per cent. On the other hand, the prices of hides, skins, and furskins fell 10.5 per cent. Import commodities showing the largest quarterly price level increases

were iron and steel, 15.7 per cent; textile yarn and fabrics, 13.2 per cent; and chemicals and related products, 7.1 per cent. Decreases were recorded for petroleum and petroleum products, 13.6 per cent; and metalliferous ores and metal scrap, 10.7 per cent.

The all groups import volume index fell 2.8 per cent from the September, 1988, to the December, 1988, quarters. Import commodities showing the largest volume decreases were transport equipment, 40.5 per cent; and iron and steel, 19.5 per cent. Significant volume increases were recorded for electrical machinery and apparatus, 15.1 per cent; and food, live animals, beverages, and tobacco, 14 per cent. The all-groups export

volume index for the December, 1988, quarter was 6.7 per cent above that for the previous 1987 quarter. Mr Moore said that New Zealand was now able to purchase more imports for the same quantity of exports. New Zealand exporters of primary products were benefiting from high world commodity prices. Although world demand remained strong for primary products, and the trend seemed to be continuing, New Zealand exporters were also doing well because of their international reputation for high quality products, Mr Moore said. “This is reflected in the fact that quantities of exports have increased as well as export price levels.”