Bank of Korea says July trade terms rose 24.7 percent

The Bank of Korea said that preliminary data showed the net commodity terms-of-trade index climbed 24.7 percent in July from a year earlier, as export prices rose much faster than import prices.

Export prices increased 36.8 percent from the same month last year, compared with a 9.7 percent rise in import prices. The income terms-of-trade index rose 49.7 percent from a year earlier. Both net commodity terms and export volumes increased. Export volume grew 20.0 percent, while import volume rose 14.7 percent.

The bank calculates the income index from net commodity terms and export volumes. Net commodity terms measure the quantity of goods that can be imported with one unit of export proceeds. Income terms measure the quantity of imports that total export proceeds can buy. Both indices use 2020 as a base year.

Among export categories, the volume index for computer, electronic and optical equipment increased 25.2 percent from a year earlier, and transport equipment rose 6.9 percent. On the import side, mining products increased 27.8 percent and computer, electronic and optical equipment rose 31.4 percent. The export value index gained 64.2 percent, compared with a 25.8 percent increase in the import value index.

Export prices rose during July despite a fall in the won-dollar exchange rate, driven by higher computer, electronic and optical equipment prices, as well as coal and petroleum products. Export prices for computer, electronic and optical equipment were 122.3 percent higher from a year earlier, while coal and petroleum product prices were up 61.5 percent.

Import prices fell during the month as the won-dollar exchange rate and Dubai crude oil prices declined. Lower prices for coal and petroleum products and primary metal products drove the overall fall. Natural gas prices rose, and raw-material import prices increased.