Issue Korea: the energy shock as sectoral asymmetry rather than an aggregate terms-of-trade loss

Summary

The report argues that the energy price shock should not be reduced to a deterioration of Korea's aggregate terms of trade. Korea depends heavily on imported crude oil, gas and naphtha and is exposed to rising import costs from Middle East instability and Hormuz risk. At the same time, AI investment and higher memory chip prices are improving export prices, so higher oil prices do not translate directly into worse overall terms of trade. The real issue is structural polarisation, in which AI-related exports lift headline indicators while energy-intensive industries and domestically oriented sectors bear the direct cost increase. The report stresses that this sectoral dynamic cannot be captured by aggregate macro indicators alone.