South Korea’s terms of trade deteriorated for the 15th consecutive month in February this year, led by sluggish mobile phone component and semiconductor exports. Both export prices and export volumes dropped last month.
The Bank of Korea announced on March 26 that South Korea’s commodity terms-of-trade index reached 93.4 last month, down 4.1 percent from a year earlier, in comparison to the reference year and index of 2010 and 100. The decline is the steepest in 11 months. The index, which indicates the ratio between the prices of one unit of exported product and one unit of imported product, shows the amount of products that can be imported per export unit.
The central bank explained that the export price fell 6.4 percent and the import price fell 2.4 percent last month, leading to the decline in the index. The index has fallen since December 2017, due mainly to the mobile phone component and semiconductor chip prices that have been on the decline.
The export value index fell 9.5 percent year on year to 108.62. It fell for the third consecutive month with the steepest decline since April 2016, when the rate of decrease amounted to 13.4 percent. The index fell 20 percent and 13.9 percent in electrical and electronic equipment and coal and petroleum products, respectively. Mobile phone components and liquid crystal displays led the decline in the former while the export value index of semiconductor integrated circuits, 171.84, fell no less than 23.4 percent from a year ago.
Likewise, the export volume index fell to 127.76 with a year-on-year decline of 3.3 percent, a five-month high. It fell 8.9 percent in electrical and electronic equipment and 12 percent in coal and petroleum products. The export volume index of semiconductor integrated circuits was 460.33 last month, up 3 percent from a year earlier but slightly lower than in January this year.
The import volume index was 114.54, down 9.7 percent compared with the same period of the previous year. The import volume index of general machinery dropped 37.5 percent and that of electrical and electronic equipment fell 8.4 percent. The former, the steepest since December 1998, was caused by a decline in semiconductor facility investment.
The import value index fell 11.9 percent to 104.27, led by a 37.9 percent decrease in general machinery and a 4.4 percent decrease in mining products.
The income terms-of-trade index, which shows the amount of products that can be imported with the total exports, reached 119.33 with a year-on-year decrease of 7.2 percent.