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South Korea’s terms of trade getting worse and worse

South Korea’s terms of trade is getting worse as the prices of imported goods rise more than those of exported goods

The Bank of Korea announced on Sept. 29 that South Korea’s net barter terms of trade index was 82.49 last month, down 10.3 percent from a year ago, down 0.3 percent from the previous month, and the lowest since records began in January 1988.

According to the bank, this deterioration in terms of trade is because the prices of imported goods rose more than those of exported goods. In August, the import value index rose 28.8 percent year on year to rise for the 21st consecutive month after an increase of 22.6 percent in the previous month. That of mining products increased no less than 77.2 percent.

Likewise, the import volume index rose 13.4 percent to an all-time high of 136.17. Those of transportation equipment and computers, electronics and optical devices increased 53 percent and 26.3 percent, respectively.

In contrast, last month, the export value and volume indices edged up 7.2 percent and 5.1 percent year on year to 136.84 and 122.43, respectively.

The income terms of trade index showed a year-on-year decline of 5.7 percent with the net barter terms of trade index falling 10.3 percent. The income terms of trade index of an economy indicates how much it can import with its total exports.

Source: BusinessKorea

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