South Korea’s terms of trade continued their upward trajectory in March, marking the 10th consecutive month of improvement. The latest data from the Bank of Korea reveals a significant 5.9 percent annual increase in the country’s net terms-of-trade index for goods, following February’s 4.6 percent increase. In January, South Korea’s terms-of-trade index for goods improved by 3.1 percent annually following December 2023’s 2.4 percent rise.
The terms-of-trade index reveals the amount of imports a country can buy for each unit of exports, with a lower figure meaning worse trade terms.
Import prices in South Korea plummeted by 13.2 percent year-on-year in March. Meanwhile, export prices experienced a modest uptick of 1.1 percent during the same period. This stark difference between import costs and export prices has significantly boosted South Korea’s trade position.
The performance of South Korea’s exports, particularly in the semiconductor sector, has been a key driver behind the country’s trade surplus. March marked the sixth consecutive month of export growth, due to the robust demand for chips.
With the increasing reliance on digital technology across various industries worldwide, South Korea’s semiconductor exports have emerged as crucial goods in its resilience.
Read: Japan faces third consecutive trade deficit amid rising import costs, weak yen
Therefore, South Korea’s trade surplus increased to $4.28 billion in March. Notably, South Korea has been maintaining a monthly surplus since June 2023. In March, outbound shipments climbed 3.1 percent year-on-year, reaching $56.5 billion. Meanwhile, imports contracted by 12.3 percent to $52.2 billion.
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