2019 Export and Import Volume Index Falls for the First Time in 10 Years... Rebounds in December

December Export and Import Volume Indexes Rose 7.7% and 4.8% Year-on-Year
"Need to Monitor the Impact of the Novel Coronavirus Further"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] Last year, global terms of trade deteriorated, causing the annual export and import volume indices in 2019 to decline for the first time in 10 years. However, with the recent easing of the US-China trade dispute and the base effect from the previous year when global trade began to decline, the export volume index in December rebounded after seven consecutive months of decline, marking an increase for the first time in eight months. The import volume index also turned upward after three months.

According to the "December 2019 Trade Index and Terms of Trade" released by the Bank of Korea on the 29th, the export volume index for 2019 was 110.30, down 2.2% compared to the previous year. The import volume index was 109.35, down 1.8% year-on-year.

Song Jae-chang, head of the Price Statistics Team at the Economic Statistics Bureau of the Bank of Korea, stated, "On an annual basis last year, both export volume and value declined. In terms of volume, oversupply of liquid crystal display (LCD) flat panel displays had an impact, while in terms of value, the continuous decline in semiconductor integrated circuit prices influenced the results." He also added, "In the case of coal and petroleum products, export volumes slightly decreased due to intensified competition among competing countries, and values declined more significantly influenced by the drop in international oil prices."

However, export and import volumes showed a rebound in December alone. Last month, the export volume index was 116.50, up 7.7% year-on-year, marking a rebound after eight months.

The increase in export volume last month was mainly influenced by computers and electronic optical devices (14.9%) and chemical products (11.8%). Export volumes of semiconductor integrated circuits (37.1%) and mobile phones (23.9%) increased significantly. The export volume of chemical products rose in December due to increased demand for cosmetics in Asia, including China.

However, the export value index was 109.77, down 0.9% year-on-year, marking a decline for 13 consecutive months. Although export volumes increased, the continued decline in semiconductor prices caused the export value of computers, electronics, and optical devices to decrease by 9.9%. Nonetheless, the decrease in the export value index was significantly reduced compared to the previous month (-12.5%).

The import volume index in December was 116.54, up 4.8% year-on-year, marking an increase after three months. Demand was temporarily suppressed in the previous year due to the BMW fire incident, and the base effect from this caused the import volume index for transport equipment to rise by 29.1%. The import of passenger cars also increased due to new car launches in the second half of the year. On the other hand, import volumes of machinery and equipment decreased, as facility investment showed weakness year-on-year, leading to reduced imports of semiconductor manufacturing equipment and display equipment.

The import value index decreased by 1.0% year-on-year. Although the import value of transport equipment increased (26.0%), the import values of mining products and primary metal products declined. Instability in the Middle East and falling metal product prices influenced this. On an annual basis, the import value index fell by 6.3%.

The net barter terms of trade index, which indicates the quantity of imports that can be purchased with the value of one unit of exports, fell 2.6% year-on-year, marking a decline for 25 consecutive months.

The income terms of trade index, which represents the total quantity of goods that can be imported with total export value, rose 4.9% year-on-year. Although the net barter terms of trade index declined, the increase in the export volume index led to a rebound in the income terms of trade index.

Team leader Song said, "It is true that volume clearly increased due to the base effect in December 2018, but since January was affected by the Lunar New Year holiday, we need to observe further." He added, "If there is no impact from the 'Novel Coronavirus Infection (Wuhan Pneumonia),' the outlook is expected to be favorable, but it is too early to say now."