Sluggish Global Demands Are to Blame
The Bank of Korea announced on Aug. 27 that South Korea’s export volume index reached 113.60 last month with a year-on-year decline of 0.7 percent. The index fell for the third consecutive month after a 7.3 percent decline in June.
The continuous decline in export volume index can be attributed to sluggish global demands and China’s oversupply of some electronic devices. For example, an increase in LCD flat panel display production in China led to a 4.3 percent decline in the export volume index of computers and electronic and optical devices. Still, that of integrated circuits including semiconductor chips rose, for the first time in three months, by 26.8 percent.
A decrease in Chinese demands for display manufacturing equipment resulted in a 5.5 percent decrease in the index of machinery and equipment. On the other hand, that of transport equipment rose 15.9 percent based on an increase in SUV exports.
Last month, South Korea’s export value index fell 10.1 percent year on year to 110.03. This index fell for eight months in a row, mainly due to falling semiconductor prices. The export value index of computers and electronic and optical devices, which dropped 22.8 percent last month, showed a decrease of more than 20 percent for the third consecutive month. The export price index of integrated circuits including semiconductor chips plummeted 26.5 percent, the steepest drop since May this year.
South Korea’s import volume index rose 4.4 percent from a year ago to 114.34 after falling in May and June. The index of computers and electronic and optical devices jumped 11.6 percent, led by an increase in import from China of non-mobile phone wireless communications devices and broadcasting equipment. In addition, the index of textile and leather products rose 9.7 percent as synthetic fiber and apparel imports from Vietnam and Myanmar increased.
Meanwhile, South Korea’s net barter terms of trade index fell for 20 months in a row and posted a decline of 2.8 percent last month. This means the prices of products South Korea exports fell more than the prices of products imported into the country. The back-to-back decline is the longest since the index continued to fall from December 2009 to June 2012.