Michael Gordon, analyst at Westpac, New Zealand’s terms of trade rose by 1% in the March quarter, following a 3.2% drop in the December quarter.
Key Quotes
“The result was slightly stronger than our forecast, due to a bigger fall in import prices than we expected. There was no market reaction to the release.”
“Export prices fell by 2.6% over the quarter, led by a 7.5% fall in dairy prices. Dairy prices at auction have risen sharply since the start of this year, but due to the time lag between price-setting and shipment we won’t see this in the trade figures until next quarter. Other export prices were mixed, with meat and forestry little changed while manufactured goods prices were down 1.5%.”
“Import prices fell by 3.5%, a move that was dominated by a 20% fall in oil prices. Prices for manufactured goods imports were down slightly, reflecting the higher New Zealand dollar over the quarter.”
“We expect a gradual improvement in the terms of trade over the rest of this year, on the back of higher dairy prices. However, we don’t expect it to return to the multi-decade highs that were reached in 2017.”
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