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S. Korea's trade terms improve in May

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(Globalpost/GlobalPost)

SEOUL, June 21 (Yonhap) -- South Korea's terms of trade improved in May as import costs fell at a faster pace than export prices amid declining oil prices, the central bank said Friday.

The country's net terms-of-trade index for goods -- a gauge of trade terms -- came in at 90.1 in May, up 6.5 percent from a year earlier, according to the Bank of Korea (BOK). The May figure also compares with the 5.4 percent on-year gain in April.

The index is calculated by dividing the export price index by the import price index. The base year is 2010 with a benchmark index of 100.

The improvement in trade terms came as oil prices are falling amid the global economic slowdown. Last month, prices of Dubai crude, South Korea's benchmark, declined 6.5 percent from the previous year.

The state-run customs agency said exports rose 3.2 percent on-year to US$48.36 billion in May, with the country posting a trade surplus for the 16th straight month.

Although export volumes rose, falls in export prices could be a cause of concern as the country's exports, which account for about 50 percent of its economic output, remain weak amid tepid global demand and the yen's standing to the Korean won, analysts said.

Korea's income terms-of-trade index, another gauge of trade terms, reached 119.2 in May, up 16.2 percent from a year earlier, the BOK noted.

The index measures how much can be imported with the total export value.

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