New Zealand Q4 terms of trade +3.7% q/q vs -0.7% expected

• Prior was -2.1%
• Import prices vs +0.8% expected
• Prior import prices +0.5%
• Export prices vs +0.5% expected
• Prior export prices -1.6%

New Zealand's terms of trade measure the ratio of the country's export prices to its import prices, serving as a key indicator of the nation's purchasing power in international markets. This metric is particularly important for New Zealand given its heavy reliance on commodity exports, especially dairy, meat, forestry products, and horticultural goods.

Throughout 2025, New Zealand's terms of trade were shaped by several intersecting forces. Global dairy prices, which represent a significant share of export revenue, experienced fluctuations driven by shifting demand from key markets such as China and Southeast Asia. The performance of Fonterra's Global Dairy Trade auctions remained a closely watched barometer for the country's export outlook.

On the import side, energy costs played a substantial role. Oil price movements, influenced by OPEC+ production decisions and broader geopolitical tensions, affected the cost of fuel and manufactured goods entering the country. A weaker New Zealand dollar relative to the US dollar also tended to push import costs higher, putting downward pressure on the terms of trade even when export volumes held steady.

Structural factors continued to matter as well. New Zealand's shift toward higher-value exports — including premium wine, technology services, and niche agricultural products — offered some insulation against raw commodity price swings. Meanwhile, supply chain adjustments following the disruptions of earlier years contributed to more stable, if elevated, import pricing.

Statistics New Zealand publishes official terms of trade data quarterly, and these releases are closely monitored by the Reserve Bank of New Zealand as an input into monetary policy decisions, given their implications for national income and inflationary pressures.