SEOUL: South Korea’s terms of trade improved from a year earlier in December as import prices fell at a faster clip than export prices, central bank data showed Monday.
The terms of trade index came to 100.83 last month, unchanged from the previous month, according to the preliminary data from the Bank of Korea (BOK). The December figure, however, marks an 8 percent increase from the same month last year.
The index measures the amount of imports a country can purchase for each unit of exports, showing how the country’s exports are doing in comparison with those of others. A reading above 100 means the country can purchase more for each unit it sells abroad.
In the entire year of 2015, the country’s terms of trade index surged 11.2 percent from a year earlier with December marking the 16th consecutive month on-year increase, according to the BOK.
The on-year rise, however, is largely attributed to a cut in import prices. In December alone, prices of South Korean exports dropped 11.8 percent on-year while those of its imports plunged 18.3 percent.
South Korea’s exports dipped every single month in 2015. “The terms of trade index for products grew 8 percent from the same month last year in December as import prices dropped at a greater rate than export prices,” the central bank said in a press release.
South Korea’s income terms of trade index also improved in December. The index, which measures the amount of imports that can be purchased with the total value of exports, gained 6.6 percent on-year to 142.75 last month.
