Last Year's Export Prices Down 5.3%, Largest Drop in 6 Years... Impact of Weak Demand and Plummeting Oil Prices

Bank of Korea 'December 2020 Export and Import Price Index'

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] Last year, the annual export price index fell by 5.3%, marking the largest decline in six years. The global demand slump caused by the COVID-19 pandemic and the sharp drop in international oil prices were the main reasons.

According to the 'December 2020 Export and Import Price Index' released by the Bank of Korea on the 13th, the annual export price index last year fell by 5.3%, mainly due to coal and petroleum products, computers, and electronic optical devices.

This is the largest decline since 2014 (-6.0%). The export price index fell for two consecutive years following a 3.4% decline in 2019.

With the sharp drop in oil prices last year, the import price index also experienced its largest decline in five years. The import price index fell by 8.7%, mainly due to raw materials, coal and petroleum products, and intermediate goods. This is the largest decline since 2015 (-15.3%).

Kang Hwan-gu, head of the Price Statistics Team at the Bank of Korea's Economic Statistics Bureau, explained, "International oil prices fell by 33.4% due to the global demand slump caused by the COVID-19 pandemic last year. This, combined with the global demand downturn, led to declines in both export and import prices."

In December last year, the export price index fell by 0.1% month-on-month as the won-dollar exchange rate declined. The average won-dollar exchange rate last month was 1,095.13 won, down 1.9% from the previous month's average of 1,116.76 won. The export price index fell by 5.4% year-on-year, marking 19 consecutive months of decline.

Kang added, "While the won-dollar exchange rate continued to decline, international oil prices rose for two consecutive months, narrowing the December export price index decline to 0.1%." The Dubai crude oil price rose 14.8% month-on-month from $43.42 per barrel in November to $49.84 in December.

The import price index rose 1.8% month-on-month in December, reversing a six-month decline due to the rise in international oil prices. However, it fell 10.2% year-on-year.

This content was produced with the assistance of AI translation services.