S. Korea's trade terms improve by sharpest pace in 21 years in 2009

SEOUL, Feb. 12 (Yonhap) -- South Korea's terms of trade improved by the sharpest
pace in 21 years in 2009 as import prices fell faster than those for exports amid
falling oil prices, the central bank said Friday.

The country's net terms-of-trade index for goods reached 86.3 last year, up 9.9
percent from a year earlier, according to the Bank of Korea (BOK). The yearly
growth marked the fastest increase since 1988 when the BOK began to compile
related data.
In the fourth quarter, Korea's trade terms climbed 14.4 percent on-year to 85.9,
the sharpest growth since the final quarter of 1991 when they gained 14.7
percent, it added.
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 country's trade terms improved fast last year as on-year retreats in oil
prices led per-unit import prices to fall faster than per-unit export prices," a
BOK official said.
Since Korea's trade terms hit a record low of 75.1 in the fourth quarter of 2008,
they have steadily improved as the global economic downturn eased, reviving
overseas demand for Korean goods. Exports account for more than 50 percent of
South Korea's economy.
Per-unit export prices fell 16.5 percent on-year to 90.5 last year while per-unit
import prices declined 24 percent to 104.9, the BOK added.
Aided by rising export volumes, the country's income terms-of-trade index jumped
33.1 percent on-year to 125.6 in the fourth quarter of last year. The quarterly
growth marked the sharpest gain since a 33.8 percent increase in the first
quarter of 2004.
The index gauges how much a country could import with total export earnings.
The South Korean economy avoided a yearly contraction in 2009 on the back of
robust exports and improving domestic demand, growing 0.2 percent.
sooyeon@yna.co.kr
(END)

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