Driven by strong semiconductor exports and increased investment in artificial intelligence (AI) infrastructure, South Korea's export volume index recorded its largest increase ever last month. The rise in export volume and improvements in trade conditions also led to a record high in the income terms of trade index.
According to the Bank of Korea's preliminary report on the 'Export and Import Price Index and Trade Index' released on November 13, the export volume index rose 43.9% compared to the same month last year, marking the highest growth rate since the statistics began.
The growth rate of the export volume index expanded for two consecutive months, increasing from 25.9% in August to 32.2% in September and then to 43.9% in October. By category, significant increases were seen in computers, electronics, and optical devices (51.2%), electrical equipment (41.0%), and machinery and equipment (38.7%).
The continued rise in export volumes of information technology (IT) products, including semiconductors and computer memory devices, was bolstered by a substantial increase in exports of AI infrastructure-related items.
Lee Heung-hoo, head of the Bank of Korea's price statistics team, stated, "The volume increase of semiconductors and computer memory devices has continued, and the volume growth of machinery and equipment, as well as electrical equipment related to AI infrastructure, has also expanded. The machinery and equipment category includes semiconductor manufacturing equipment, while electrical equipment includes transformers and batteries for data centers."
The export value index also rose 107.6% compared to the same month last year. The import volume index and import value index increased by 14.9% and 36.6%, respectively.
The income terms of trade index, which reflects the country's purchasing power, surged 74.6% year-on-year, achieving its highest growth rate ever. This was influenced by the 43.9% increase in the export volume index and a 21.3% improvement in the net commodity terms of trade index.
The net commodity terms of trade index rose as the increase in export prices (44.3%) outpaced the rise in import prices (18.9%). However, the growth rate was smaller than in September (25.4%). The increase in semiconductor export prices has somewhat slowed, while the rise in import prices has been exacerbated by increasing international oil prices.
Lee noted, "Although the growth rate of the net commodity terms of trade index has slowed, the record increase in export volumes has led to the highest growth rate in the income terms of trade index. The favorable trade conditions continue to be supported by strong export volumes."
Last month, the export price index (in won, with 2020 as the base year) was 184.15, reflecting a 0.7% increase from the previous month. This marked a turnaround after two consecutive months of decline in August (-3.5%) and September (-0.5%).
Despite a decrease in the won-dollar exchange rate, prices for computers, electronics, and optical devices rose by 3.7%, contributing to the overall increase in export prices. Notably, the export price of DRAM surged by 5.5% from the previous month and 199.4% compared to the same month last year.
Lee explained, "The increase in export prices can be attributed to the reflection of fixed contract prices for semiconductors in the fourth quarter. The price increase for general DRAM has been much larger than that for high-bandwidth memory (HBM), leading to a sustained rise centered on general DRAM."
In contrast, the import price index fell to 156.86, a decrease of 1.8% from the previous month, reversing the 1.9% increase seen in September.
Last month, the average monthly won-dollar exchange rate was 1,337.66 won, down 1.6% from the previous month (1,359.00 won). During the same period, the average monthly price of Dubai crude oil also decreased from $113.71 per barrel to $110.73, a drop of 2.6%.
As a result, the import price of raw materials fell by 3.0%, primarily driven by a decline in mining products. Intermediate goods also saw a 1.0% decrease, influenced by a drop in primary metal products (-4.2%). Capital goods and consumer goods fell by 1.8% and 1.4%, respectively.
International oil price declines are expected to impact import prices in November as well. Lee stated, "The exchange rate from November 1 to 11 has slightly increased compared to October, but international oil prices have dropped by about 13% during the same period. This decline in international oil prices is expected to act as a downward factor for import prices."
* This article has been translated by AI.
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