Story: Prices and inflation

Terms of trade, 1957–2008

Terms of trade, 1957–2008

The terms of trade index measures the difference between prices received for New Zealand exports and prices which New Zealand pays for imports. When the terms of trade were high, as in the mid-1960s or early 1970s, New Zealand was able to purchase more goods and services from overseas with the money earned from its exports. When the terms fell, as after the oil shock of 1973–74, New Zealand had to sell more goods overseas in order to retain the quantity of goods coming in to the country. From the oil shock until 2000 the terms were consistently low, and then increased relative to other prices in the early 2000s, as international prices for New Zealand primary produce rose.

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How to cite this page:

Adolf Stroombergen, 'Prices and inflation - Terms of trade and the exchange rate', Te Ara - the Encyclopedia of New Zealand, (accessed 8 December 2021)

Story by Adolf Stroombergen, published 11 Mar 2010