Ukraine goods trade deficit enlarges to USD 1 bln in June

Ukraine’s goods trade deficit reached USD 1.1 bln in
June, surging from USD 0.5 bln in May, the State Statistics Service said in its
preliminary report on Aug 14. The seasonally adjusted goods trade deficit
amounted to USD 1.2 bln (enlarging from a USD 1.0 bln deficit in May) amid a
3.7% m/m decline in adjusted exports and no month-to-month change in adjusted
imports.

In June, goods exports declined 5.9% yoy (vs. 13.0%
growth in May). In particular, ferrous metal exports plummeted 24.0% yoy (vs.
6.5% decline in May), while machinery exports dropped 19.7% yoy (vs. 9.6%
decline in May). In addition, grain exports slowed to 6.1% yoy growth (vs.
54.6% yoy surge in May). Goods imports in June slowed to 4.1% yoy growth (vs.
9.0% yoy growth in May). In particular, imports of energy products dropped 16%
yoy (vs. 1.5% yoy growth in May). Meanwhile, machinery imports accelerated to
17.0% yoy growth (from 9.2% yoy growth in May), and imports of road vehicles
and aircraft sped up to 36.1% yoy (vs. 28.1% yoy growth in May).

In 1H19, the trade deficit reached USD 3.7 bln,
enlarging 36.2% yoy. In 1H19, goods exports advanced 5.2% yoy to USD 24.5 bln.
Meanwhile, goods imports rose 8.5% yoy to USD 28.2 bln.

Exports to the EU declined 5% yoy in 1H19, while EU
imports increased 9.1% yoy. The share of the EU in Ukraine’s exports and
imports amounted to 42.0% and 41.9%, respectively.

Evgeniya Akhtyrko: The
situation in external trade in goods deteriorated significantly in June. As we
expected, the contribution of grain exports is waning as the effect of the
record-high grain harvest of the previous year fades away. At the same time,
the decline in exports of ferrous metals and machinery only deepened.

The slowdown in import growth is not likely to last
long. We expect imports to pick up in 2H19 as Ukraine restores its purchases of
energy products.

The provisional customs statistics released this month
promise that July’s goods trade deficit will be around USD 1 bln, staying close
to the level of the previous month.

We expect the 2019 goods trade deficit (according
to UkrStat methodology) to swell to USD 11.5 bln (from USD 9.9 bln in 2018),
with import growth outpacing export gains.