Korea’s exports accelerate, suggesting resilient global demand

South Korea’s exports accelerated in May, suggesting global demand remains resilient in the face of war in Ukraine and a slowing economy in China.

Overseas shipments advanced 21.3% from a year earlier, trade ministry data showed Wednesday, exceeding economists’ forecasts for an 18.4% gain. Exports to China rose 1.2% in May after dropping a month earlier, while total semiconductor shipments increased 15%.

Korea’s manufacturers are positioned widely across global supply chains and the nation’s export data comes out ahead of peers, providing an early pulse check on the strength of world trade.

Demand has been weakening in Europe and China since Russia invaded Ukraine and some Chinese cities went into lockdown under a zero Covid policy. Rising energy and commodity prices have also resulted in South Korea posting trade deficits for much of the year.

Still, an economic recovery in the U.S. has helped shore up Korean exports, with demand for technology products such as displays and semiconductors staying resilient. Refined-oil exports have also gotten a boost from higher energy prices.

With an economy heavily reliant on trade, South Korea needs exports to hold up in order to maintain economic momentum and provide room for the Bank of Korea to stick to its path of policy normalization. The central bank has raised rates five times since last summer, with the governor signaling more hikes to come.