Trade conditions drops to worst level in nine years

External trade conditions for Korea have worsened for 11 consecutive months, dropping to the lowest point in nine years and three months. Such conditions have been aggravated by surging raw material prices including oil prices, with import prices overtaking export prices. According to a Bank of Korea data on Wednesday, net product trade condition index (based on 100 as of 2005) stood at 87.69, a 7.4% drop from a year earlier. The index indicates the volume of imports purchasable with financial value by exporting a single product- meaning that 87.69 imports could be acquired by exporting 100 exports last month.

Net product trade condition index has been declining for 11 consecutive months, dropping to the lowest point in nine years and three months since November 2012 (at 86.88) and driven by rising import prices (21.9%) against export prices (12.8%) over the year.

Import value index as of last month was 148.55, up 25.5% from the same period last year and steadily rising for 15 consecutive months. Coal and oil products soared 65.4%, while mine products (44.8%) and agricultural/fishery products (35%) rose significantly as well. “Overall price surge of crude, natural gas, coal and other raw material prices drove import value indexes, mostly for mine and oil products,” explained an official at the Bank of Korea. The export value index as of last month stood at 128.34, 19.7% higher than last year.


Min-Woo Park minwoo@donga.com