S. Korea's trade terms hit near 2-year high in Q2

SEOUL, Aug. 13 (Yonhap) -- South Korea's terms of trade rose to a near two-year high in the second quarter as retreats in oil and raw material prices lowered the country's import bills, the central bank said Thursday.

The country's net terms-of-trade index for goods reached 90.3 in the April-June
period, up 12.2 percent from a year earlier, according to the Bank of Korea
(BOK).
The index climbed to the highest level since the third quarter of 2007 when it
came in at 90.5. The figures also marked the fastest quarterly growth since the
fourth quarter of 1991 when it rose 14.7 percent, the BOK added.
The index is calculated by dividing the per-unit export price by the per-unit
import price. The base year is 2005 with a benchmark index of 100.
"The terms of trade improved last quarter as on-year falls 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 last
year, they have steadily improved as the global economic recession eased,
reviving overseas demand for Korean goods. Exports account for more than 50
percent of South Korea's economy.
Oil prices have been stabilizing since peaking at US$147 per barrel in July last
year. South Korea, the world's fifth-largest crude buyer, relies entirely on
imports for its oil needs.
Per-unit export prices fell 22.1 percent on-year to 88.6 in the second quarter
while per-unit import prices declined 30.5 percent to 98.1, the BOK said.
The data came as the South Korean economy grew 2.3 percent in the second quarter
from three months earlier, the fastest expansion in more than five years, as
economic stimulus packages helped boost consumer spending and exports rose.