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Deepening Reliance on Foreign Trade
Korean Economy
Deepening Reliance on Foreign Trade
  • By matthew
  • December 5, 2013, 05:40
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Dusk falls over cargo containers stacked 3-high at Busan Harbour Cargo Terminal. Imports and exports constitute 33.7% of the total national economy. (Photo by Eastberliner via Wikimedia Commons)
Dusk falls over cargo containers stacked 3-high at Busan Harbour Cargo Terminal. Imports and exports constitute 33.7% of the total national economy. (Photo by Eastberliner via Wikimedia Commons)

 

Korea’s imports and exports represent more than 30% of the total economy. With the dependence of the world’s 13th-largest economy on external trade growing more, the influence of external factors is likely to be getting bigger. 

According to the Input-Output Tables for 2011 published by the Bank of Korea (BOK) on November 22, the nation’s aggregate supply of goods and services posted 4.1262 quadrillion won (US$3.8 trillion) in 2011, a year-on-year increase of 10.5%. Imports and exports increased for the 2nd straight year, constituting 33.7% of the total monetary supply, up 0.8% from a year ago. The corresponding figures for 2008, 2009, and 2010 were 34.1%, 31.8%, and 32.9%, respectively.  

Exports grew 1.5% year-on-year to reach 36.6% in 2011, but the same year experienced a 0.8% decrease in consumption (44.3%), and a 0.6% drop in investment (19.1%). 2011 also saw the growing reliance on the manufacturing industry. The manufacturing sector comprised 52.2% of the industrial structure (calculated by subtracting imports from total supply), a 2% year-on-year gain. In contrast, the service industry was down 1.2% year over year, accounting for 36.5% of the total. 

Meanwhile, trade conditions in October 2013 were reported to be the best, affected by an increase in exports. According to the International Trade Indices and Terms of Trade for October released by BOK, the terms of trade index recorded 122.6 last month (2010 = 100), a 12.2% year-on-year increase. The October figure has been the highest since the introduction of the index in 2010. If a country’s terms of trade are high (more than 100%), the value of the country’s exports is higher than that of its imports.

The export price index hit 137.4, up 8.8% from a year ago, the highest since 2010. Among export items, communications & audio-visual devices, transport equipment, and textiles & leather goods inched up 30.7%, 17.7%, and 16.3% each. The import price index posted 117.3, a year-on-year increase of 10.5%, which is the highest level. Specifically, the import of machine tools, coal & oil products, and textiles & leather products gained 42.8%, 22.4%, and 20.7%, respectively. 

The net barter terms of trade index, calculated as the proportion of the export unit value indexes to those of the import, rose 3.2% from the previous year to record 89.2, a continuing upward trend for the eighth month in a row.