South Korea exports growth accelerates in May, China curbs hurt

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FILE PHOTO: A truck carrying a shipping container travels past cranes at Pyeongtaek port in Pyeongtaek

By Cynthia Kim

SEOUL (Reuters) – South Korea’s exports grew at a faster pace in May than a month earlier as a rise in shipments to Europe and United States more than offset disruptions to trade with China from its strict COVID restrictions.

Exports rose 21.3% from a year earlier to $61.52 billion, trade ministry data showed on Wednesday, beating the forecast for 19.3% growth in a Reuters poll and well ahead of a 12.9% rise in April.

South Korea’s monthly trade data, the first to be released among major exporting economies, is considered a bellwether for global trade.

Shipments to the United States jumped 29.2% from a year earlier, above than April’s 26.6%, while exports to the European Union gained 23.5%.

Lockdowns in China have snarled logistics and supply chains, hammering trade in the region.

Exports to China grew just 1.2% in May from a year earlier after declining 3.4% in April.

Imports, meanwhile, jumped 32.0% to $63.22 billion. That brought the trade balance to a $1.71 billion deficit, after logging a $2.51 billion deficit in April.

“May this year had more working days compared to last year. Exports to the U.S. and Europe continue to be strong, although China-bound exports and shipments to Hong Kong remain weak amid their COVID policies,” said Park Sang-hyun, an analyst at HI Investment & Securities.

“Going forward, the biggest risk to South Korea’s exports cycle would be China.”

Wednesday’s trade data comes as the Bank of Korea delivered back-to-back interest rate hikes last week to bring consumer inflation down from 13-year highs.

The central bank also downgraded the country’s growth forecast for this year to 2.7% from an earlier forecast of 3.0%, as it sees slower global demand hurting South Korea exports in the second half.

(Reporting by Cynthia Kim; editing by Richard Pullin)