By Cynthia Kim

SEOUL (Reuters – South Korea’s exports grew faster in May than a month ago, as a surge in shipments to Europe surpassed shipments to the United States. This was due to a greater balance between trade disruptions with China caused by its COVID regulations.

On Wednesday trade ministry data revealed that exports rose 21.3% over a year to $61.52Billion. That beats the 19.3% predicted in a Reuters poll, and is well ahead of the 12.9% increase in April.

South Korea’s monthly data on trade, which is among the largest exporting nations, are considered an indicator of global trade.

The United States saw a 29.2% increase in its shipping volume compared to a year ago, which was above April’s 26.6%. However, exports to Europe increased 23.5%.

China lockdowns are encroaching on supply chain and logistics, making it hard to trade.

China exports grew by just 1.2% in May, compared with 3.4% growth in April.

In the meantime, imports jumped 32.0%, to $63.22 trillion. After registering a deficit of $2.51 billion in April, the trade deficit jumped 32.0% to $1.71 Billion.

This year, May had more work days than 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.

China would pose the greatest risk for South Korea’s future exports cycle, “said Kim.

The Bank of Korea has announced Wednesday’s trade data as it delivered two consecutive interest rate increases last week in an effort to lower consumer inflation from its 13-year peak.

In light of slower demand from the rest of the world, the central bank has also reduced the country’s expected growth to 2.7% for the year. This is a reduction from 3.0% in an earlier forecast.