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BCRP: terms of trade index reaches historical maximum value in 2021

The Central Reserve Bank of Peru (BCRP) reported that the terms of trade index reached the historical maximum value of 115.4 in 2021.

This, thanks to higher export prices, whose index registered the value of 156. Meanwhile, import prices had an index of 135.2.

“The terms of trade had an average annual increase of 11.8% in 2021, the highest growth rate in the last eleven years,” specified the highest issuing entity.

This expansion was due to the rise in export prices, whose increase was 30.3% last year, while import prices grew 16.6% on average.

“Thus, the terms of trade continued their expansion that began in 2020, in a context of improving prices of mining products, hydrocarbons, and coffee,” the BCRP noted.

BCRP: What are terms of trade?

We define terms of trade as the relationship (quotient) that exists between the prices of export products and the prices of import products, that is, the relative price of exports in terms of imports.

An increase (decrease) in the terms of trade index in a given period means that export prices increase (decrease) more or decrease (increase) less than import prices in that period. This implies that, with the same physical quantity of exports, the country can import a larger (smaller) quantity of goods.

Source: Larepublica

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