Import Price Index Declines for Two Consecutive Months
Due to the downturn in the IT sector and the resulting decline in exports such as semiconductors, South Korea's export value index fell by more than 18% compared to a year ago last month. The import value index also dropped by more than 2%, marking a decline for the second consecutive month. As export prices fell more sharply than import prices, the terms of trade worsened for the 22nd consecutive month.
According to the 'January Trade Index and Terms of Trade' (based on the dollar) statistics released by the Bank of Korea on the 28th, the export value index last month decreased by 18.3% compared to a year earlier. This is the lowest level in 2 years and 8 months since May 2020 (-25.0%). It marks the fourth consecutive month of decline following October (-6.6%), November (-11.5%), and December (-12.3%) of last year.
By item, transportation equipment (8.5%) and coal and petroleum products (12.6%) increased, but computers, electronics, and optical devices (-36.0%) and chemical products (-17.6%) sharply decreased.
The export volume index also fell by 13.0% compared to the same month last year. This is the lowest level in 2 years and 8 months since May 2020 (-14.8%) and marks the fourth consecutive month of decline. Transportation equipment (8.5%) increased, but computers, electronics, and optical devices (-18.7%) and chemical products (-11.3%) decreased significantly.
The import value index and import volume index in January fell by 2.1% and 1.2%, respectively, compared to a year ago. Both indices have been declining for two consecutive months.
The import value index increased in transportation equipment (40.3%) and electrical equipment (21.3%), but decreased in primary metal products (-19.0%) and mining products (-4.0%), resulting in a 2.1% decline compared to the same month last year.
The export-import value index is an indicator calculated by dividing the export-import value at the given time (in dollars) by the export-import value at the base period (2015). The export-import volume index is calculated by dividing this export-import value index by the export-import price index.
The net commodity terms of trade index fell by 5.2% compared to a year ago, marking a decline for the 22nd consecutive month. Export prices (-6.1%) fell more sharply than import prices (-0.9%), worsening the terms of trade.
The net commodity terms of trade index is the ratio of the price of one unit of export goods to the price of one unit of import goods, serving as an indicator of how much import volume South Korea can obtain per unit of export.
The income terms of trade index fell by 17.5% during the same period, marking a decline for 12 consecutive months. This is because both the export volume index (-13.0%) and the net commodity terms of trade index (-5.2%) declined last month. The income terms of trade index shows the total volume of goods that can be imported with South Korea's total export value.
Seo Jeong-seok, head of the Price Statistics Team at the Bank of Korea, explained, "As the IT sector downturn deepened, export volumes in January decreased sharply," adding, "The 17.5% decline in the income terms of trade index is the largest drop in 14 years since January 2009 (-25.6%)."
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