Impact of Weak Demand and Exchange Rate Decline... Export Prices See Largest Drop in 13 Years

Export Prices Fall 5.2%, Import Prices Fall 5.3%

[Asia Economy Reporter Seo So-jeong] The export price index fell the most in 13 years and 7 months due to weak global demand and a decline in the exchange rate. Additionally, the import price index turned to a downward trend last month after three months, influenced by the decline in the won-dollar exchange rate and international oil prices.

According to the Bank of Korea on the 15th, the export price index (based on the Korean won) in November fell by 5.2%. The month-on-month decline was the largest since April 2009 (-6.1%), marking the biggest drop in 13 years and 7 months. This was due to the fall in the won-dollar exchange rate along with decreases in coal and petroleum products, and chemical products. The export price based on contract currency, which limits the exchange rate effect, fell by 1.3% compared to the previous month. The average won-dollar exchange rate last month was 1,364.10 won, down 4.4% from the previous month (1,426.66 won).

The Bank of Korea stated, "Due to weak demand caused by economic slowdown, export prices based on contract currency declined," and added, "The decline in the won-dollar exchange rate (won appreciation) leads to an increase in export prices in dollar terms, negatively affecting export competitiveness. However, in a situation where global demand is decreasing due to economic slowdown, it will be difficult for companies to fully reflect the exchange rate appreciation in export prices." They further explained, "Regarding export price competitiveness, the speed of exchange rate appreciation compared to major export competitors may also have an impact, so this should be monitored going forward."

Agricultural, forestry, and fishery products fell by 2.1% month-on-month, and manufactured goods declined by 5.2%, mainly due to decreases in coal and petroleum products, chemical products, and computers, electronics, and optical devices. By item, ethylene vinyl acetate (-21.2%), cotton yarn (-12.2%), jet fuel (-12.1%), diesel (-10.3%), and xylene (-10.1%) decreased.

The import price index (based on the Korean won) fell by 5.3% month-on-month. Although import prices had declined for two consecutive months in July and August, they continued to rise in September and October before turning downward again in November.

Due to the rise in the won-dollar exchange rate and international oil prices, mining products and chemical products fell, resulting in a 5.3% month-on-month decline. However, compared to the same month last year, it rose by 14.2%. The import price based on contract currency, which limits the exchange rate effect, fell by 1.5% compared to the previous month.

The monthly average price of Dubai crude oil fell by 5.4%, from $91.16 per barrel in October to $86.26 last month.

By item, jet fuel (-17.9%), xylene (-11.6%), diesel (-10.6%), beef (-9.6%), crude oil (-9.5%), acrylic acid (-8.9%), and graphics cards (-7.8%) decreased.

The November import price index rose 14.2% year-on-year, marking 21 consecutive months of increase, while the export price index rose 8.6%, marking 22 consecutive months of increase.