Net Barter Terms of Trade Index Falls for the 28th Consecutive Month in March

The Bank of Korea announced on April 28 that South Korea’s net barter terms of trade index fell 2.6 percent from a year ago in March this year. The index fell for the 28th consecutive month with the export price and import price falling 9.2 percent and 6.8 percent, respectively. The index can be defined as the amount of goods that can be imported with unit export.

Meanwhile, the income terms of trade index rose 7.7 percent from a year earlier as the export volume index increased 10.6 percent. The index can be defined as the amount of goods that can be imported with total exports.

The export volume index increased in spite of the spread of COVID-19 and this is because semiconductor exporters fared well. Last month, the exports of semiconductors, computers and electronic and optical equipment rose 15.2 percent although machinery, textile and leather product exports decreased. In addition, chemical product exports increased 11.2 percent, led by cosmetics and medicines. The import volume index rose 1.5 percent based on an increase in semiconductor manufacturing equipment import. Machinery imports showed a year-on-year increase of 26.2 percent.

Although the export volume index improved last month, South Korea’s exports for the following months are likely to take a hit from the coronavirus. According to the Korea Customs Service, the exports on a customs clearance basis totaled approximately US$21.73 billion for the first 20 days of this month, down 26.9 percent from a year ago.