Ukraine goods trade deficit surges 75% m/m in September

Ukraine’s goods trade deficit amounted to USD 1,468
bln in September, surging 75.0% m/m from USD 839 mln in August, the State
Statistics Service stated in its preliminary report on Nov. 14. The seasonally
adjusted goods trade deficit enlarged 37.7% m/m amid an adjusted export decline
of 3.3% m/m and adjusted import growth of 3.9% m/m.

In 9M18, the trade deficit reached USD 6.5 bln, or a
67.1% yoy surge. Imports advanced 16.1% yoy, outpacing exports, which grew
10.3% yoy. The major contributors to import growth were machinery (20.0% yoy),
energy (14.8% yoy), and chemicals (10.4% yoy).

Export growth continued to be driven by ferrous metals
(25.3% yoy growth in 9M18), machinery (14.4% yoy), and timber (30.5% yoy).

Exports to the EU grew 16.0% yoy in 9M18, outpacing
import growth of 13.1% yoy. The share of the EU in Ukraine’s exports and
imports amounted to 42.3% and 41.1%, respectively.

Evgeniya Akhtyrko: The trade
deficit’s growth significantly accelerated in September amid falling imports.
The 9M18 goods trade deficit overshot our estimate of USD 6.1 bln.

The provisional customs statistics indicate that the
trade deficit will amount to USD 1.5 bln in October and bring the 10M18 result
to around USD 8.0 bln.

We expect the 2018 goods trade deficit (according to
UkrStat methodology) to reach 9.0 bln, with import growth outpacing export
increases. The goods trade deficit surge in September-October should inevitably
translate into weakening of the national currency (though it remained stable in
October). We expect the exchange rate to depreciate to UAH 29.50/USD by the end
of 2018.