Largest drop in terms of trade in a decade as dairy export prices sour

Lower export prices for dairy, meat, and logs in the September 2020 quarter led to the biggest drop in terms of trade since June 2009, Stats NZ said today.

Export prices fell in the September 2020 quarter, down 8.3 percent from its highest ever level in June 2020. This is the third largest fall in export prices since the series began. Import prices fell 3.7 percent, resulting in a terms of trade fall of 4.7 percent.

The terms of trade measures the purchasing power of New Zealand's exports abroad and is an indicator of the state of the overall economy. A fall in the terms of trade means the country can buy fewer imports for the same amount of exports.

'Export prices for dairy products fell 12 percent overall in the quarter,' business prices manager Bryan Downes said.

'Global dairy trade (GDT) prices rose overall in the same period; however, the GDT only represents a proportion of the dairy products exported by New Zealand.'

'Dairy values have been the most affected with a 16 percent drop in the quarter compared with a 3.3 percent fall in dairy volumes exported,' Mr Downes said.