South Korea’s terms of trade worsened to the lowest level in nearly three years in the third quarter as on-year gains in oil prices jacked up import costs, the central bank said Monday.
The country’s net terms-of-trade index for goods came in at 78.7 in the July-September period, down 9.9 percent from a year earlier, the Bank of Korea said in a report. The third-quarter data marked the lowest level since 75.1 in the fourth quarter of 2008.
The on-year growth rate also was the sharpest fall since the trade terms declined 13 percent on-year in the fourth quarter of 2008.
The index is calculated by dividing the export price index by the import price index. The base year is 2005 with a benchmark index of 100.
The worsened numbers came as per-unit import prices grew faster than per-unit export prices due to gains in commodity prices, the BOK said.
Per-unit export prices rose 9.5 percent on-year to 112.7 in the third quarter and per-unit import prices jumped 21.5 percent on-year to 143.1, it added.
South Korea’s exports, which account for about 50 percent of economic output, fared well this year, weathering the global economic slowdown.
Prices of export goods, led by semiconductor prices, logged sharp falls, but overseas shipments of petrochemical products and autos pushed up Korea’s exports.
Since South Korea’s trade terms hit a record low in the final quarter of 2008, they have steadily improved on the global recovery, which has revived overseas demand for Korean goods.
But higher oil costs increased the country’s import bills, causing the country’s terms of trade to deteriorate.
If taking into account export volumes, the country’s income terms-of-trade index, another gauge of trade terms, grew 3.1 percent in the third quarter from a year earlier, on the back of an increase in export volumes.
The index measures how much can be imported with the total export value. The third-quarter data quickened from a 2.9 percent gain in the second quarter, it added.