In February, the terms of trade of exported and imported products reached the highest level in four years and seven months because of the drop in oil prices.
According to February’s Trade Index and Terms of Trade reported on March 24 compiled by the Bank of Korea, the net barter terms of trade index of last month increased 12.6 percent from a year ago with 100.52. This is the highest level since July 2010 (100.53).
The rise in the index was due to the oil price drop. It increased for six consecutive months from last September, and the increase gap is also getting larger. The Dubai average oil price in February dropped 47 percent from a year ago.
The income terms of trade index, which indexed the amount of imported products bought with the total export prices, increased 10.1 percent from the same month last year. Exports decreased 11.5 percent in February. Exports of coal and oil products plummeted by 42.7 percent due to the oil price drop. Exports of agricultural, forestry, and marine products decreased 31.4 percent.
Imports decreased 20.4 percent, which was largely attributable to decreased imports of coal and oil products and mining products. The former dropped 53.9 percent and the latter 43.9 percent, respectively. Imports showed a downward trend for five months. The decreases of imports and exports in February were mainly due to the decrease in working days because of the Lunar New Year holiday.