March Export Volume Rises 10.6%... Terms of Trade Worsen for 28 Consecutive Months

"Semiconductors, Export Price Decline Increases... Deterioration of Terms of Trade"

[Asia Economy Reporter Jang Sehee] In March, semiconductor industry improvements led to simultaneous increases in export volume and value indices. However, the terms of trade continued to deteriorate as export prices fell significantly more than import prices.

According to the "March Trade Index and Terms of Trade" released by the Bank of Korea on the 28th, the export volume index last month was 122.78 (2015=100), up 10.6% compared to the same month last year. Although machinery and equipment (-4.9%) and textile and leather products (-9.2%) decreased, the volume of computers, electronics, and optical devices surged by 15.2%.

The export value index also rose 0.4% year-on-year to 111.45, led by electrical equipment (6.2%).

Both import volume and import value increased as well. The import volume index (116.71) rose 8.8% year-on-year, driven by computers, electronics, and optical devices (12.8%) and coal and petroleum products (36.9%). Import value increased 1.5% year-on-year to 117.27. Although mining products decreased by 8.9%, machinery and equipment increased by 26.1%.

The net goods terms of trade index fell 2.6% year-on-year, continuing a decline for 28 consecutive months since December 2017. A decline in the net goods terms of trade index means that the amount of goods that can be imported with the revenue earned from exporting one unit of goods (in dollar terms) has decreased.

A Bank of Korea official explained, "The larger decline in export prices had a significant impact," adding, "As export prices fell more sharply, the net goods terms of trade index has also shown a continuous downward trend."

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