10 Sep 2010

Terms of trade strengthen further

1:05 pm on 10 September 2010

The country's purchasing power with the rest of the world has continued to rise, thanks to stronger global demand for dairy products and meat.

Official figures show the terms of trade rose 2.1% in the three months to June, due to export prices rising more than import prices.

The head of markets at ANZ Bank, Khoon Goh, says higher commodity prices underpin the rise, which should boost rural incomes and eventually spread to the rest of the economy.

On an annual basis, the terms of trade rose 12.7%, the largest annual increase in 31 years.

Export volumes edged up, due to higher forestry products and meat sales offsetting lower petroleum and dairy products, while import volumes rose 1 percent.

Statistics New Zealand says the terms of trade, which reflects how much imports can be bought for every dollar of exports sold, is 3% below a 34-year high reached in March 2008.