Ukraine C/A deficit widens to USD 414 mln in August
3 October 2016
Ukraine’s current accounts (C/A) deficit widened to USD 414 mln in August from a USD 354 mln deficit in July, the National Bank (NBU) reported on Sept. 30. The main factor was the trade deficit widening to USD 672 mln from a USD 566 mln gap in July. Remarkably, the trade balance worsened disregarding exports being in green (+1.4% yoy) for the first time since December 2013. Imports grew even stronger (+13.4% yoy), thus securing the deficit expansion. Goods exports increased 1.0% yoy on the back of minerals (+13% yoy), food (+6% yoy) and metals (+5%). At the same time, machinery exports plunged 32% yoy. Commodity imports sped up 14.9% yoy owing to a 58% yoy surge in machinery, 31% yoy growth in food and a 14% yoy increase in chemicals. Energy import declines slowed to -17% yoy from -27% yoy in the prior month.
Financial and capital accounts were reported in surplus of USD 430 mln in August, close to the level of the previous month (USD 464 mln surplus). Lower debt repayments of banks (USD 77 mln vs. USD 367 mln in July) underpinned relatively high levels of capital inflows. At the same time, FDI dropped to USD 129 mln in August from USD 291 mln in July and individual cash returns to the banking system decreased to USD 310 mln from USD 601 mln in July.
The general balance decreased to a USD 16 mln surplus compared to a USD 110 mln surplus in the prior month. As a result, gross international reserves were almost flat month-on-month at the level of USD 14.1 bln (3.6 months of future imports).
Alexander Paraschiy: External accounts developed perfectly in line with what we initially estimated. The optimism of NBU Deputy Head Oleg Churiy about a USD 1.8 bln C/A deficit in 2016 will not come to reality. Already in 8M16, C/A deficit reached USD 1.4 bln and will only expand further. Energy imports will be among the drivers of deficit growth as Ukraine imported 0.41 bcm of natural gas in July, 1.4 bcm in August and starting September, we expect average monthly gas imports to be near 1.5-1.7 bcm. Against this backdrop, we are keeping our initial 2016 C/A forecast unchanged at USD 4.0 bln (4.5% of GDP).
