August Terms of Trade Also Worst Ever... Impact of Semiconductor and Petroleum Product Price Declines

Net Merchandise Trade Index 82.49 'All-Time Low'
Record Lowest in August Following July

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] Last month, import prices rose more sharply than export prices, causing the net barter terms of trade index to decline for the 17th consecutive month, reaching the lowest level ever recorded since statistics began. The net barter terms of trade index is the ratio of the price of one unit of exported goods to the price of one unit of imported goods; a lower index indicates worsening trade terms.

According to the "August Trade Index and Terms of Trade" (based on the dollar, provisional) released by the Bank of Korea on the 29th, last month's net barter terms of trade index (82.49) fell 10.3% compared to the same month last year. It decreased by 0.3% compared to the previous month.

Seo Jeong-seok, head of the price statistics team at the Bank of Korea, explained, "In August, the net barter terms of trade index showed the lowest level ever as import prices (13.6%) rose more than export prices (2.0%). Although the decline in import prices due to the fall in international oil prices acted as an improvement factor, the effect was offset by a further decline in export prices caused by weak semiconductor prices and falling prices of petroleum and chemical products."

Last month's import value index was 184.49 (2015=100), up 28.8% from a year earlier. This marks the 21st consecutive month of increase, with the rise (22.6%) larger than in July. While primary metal products (-13.0%) decreased, mining products (77.2%) and computers, electronics, and optical devices (15.8%) rose significantly.

The import volume index (136.17) recorded the highest level ever, rising 13.4% year-on-year, despite decreases in primary metal products (-15.7%). Increases were seen in transport equipment (53%), computers, electronics, and optical devices (26.3%), and mining products (23.7%). The import volume index excludes import values of ships, weapons, aircraft, artworks, and other items excluded from the import price index due to difficulties in price investigation among customs clearance amounts.

Seo said, "The import volume index reached an all-time high due to a surge in energy imports caused by the August heatwave, a recent increase in imports of semiconductors, which are basic intermediate goods for industrial production, and a rise in passenger car imports."

The export value index for August was 136.84, up 7.2% from a year earlier, marking the 22nd consecutive month of increase. While computers, electronics, and optical devices (-9.2%) decreased, coal and petroleum products (110.8%) and transport equipment (28.2%) rose.

The export volume index (122.43) increased 5.1% year-on-year. Chemical products (-1.9%) decreased, but coal and petroleum products (39.6%) and transport equipment (29.7%) increased.

The income terms of trade index (100.99), which shows the total quantity of goods that can be imported with the total export amount of South Korea, fell 5.7% from a year earlier. This was due to the rise in the export volume index (5.1%) being offset by the decline in the net barter terms of trade index (-10.3%).

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