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Trade balance slips further into the red

New Zealand has posted the third consecutive fall in the terms of trade.

Volumes of exports and imports are down, reflecting the slowing world economy, but prices of both are up.

The quarterly result caps off a year of dramatic changes in New Zealand’s trade balance.

On an annual basis, total import prices rose 19.2% for the 12 months to December, compared to a 1.4% decrease the previous year, and a 4.4% increase in 2006.

Export prices increase 21.4% for the year, compared to 7.3% the previous year and 8.3% in 2006.

In the most recent quarter, export volumes dropped 1.8%, with petroleum, and petrol products showing the largest drop at 17.5%.

Forestry products were another significant contributor with a 5.7% drop.

Export prices were up 2.5%, driven primarily by the decline in the New Zealand dollar, says Statistics New Zealand.

On the import side, volumes fell 4.8%, with passenger cars (27.1% and capital goods (7.7%) being the principle contributors.

Import prices, meanwhile, rose 3.4% - a rise which follows substantial previous quarterly increases (9.6% and 4.9% for the September and June quarters respectively).

Again, the drop in the New Zealand dollar is the main reason.

However a decline in petrol and related prices (down 22.4% for the quarter) has helped prevent the increase in import prices from being as bad as it could have been.

There have been substantial price rises in mechanical machinery, which is up 18.3% - the largest quarterly rise since the survey began in 1971.


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