Ukraine 4M16 trade deficit on goods improves to USD 0.9 bln

Ukraine’s trade balance on goods improved to a USD 881 mln deficit in 4M16 from a USD 961 mln deficit in 3M16, the State Statistics Service reported on June 15.  Still the balance was much worse than a year ago, when there was a USD 38.6 mln surplus for 4M15. Exports of goods in 4M16 fell 13.9% yoy on the back of chemicals (-39% yoy), minerals (-30% yoy), and metals (-30% yoy).  Imports of goods fell 6.6% yoy due to a -52% yoy energy imports slump for 4M16. At the same time, non-energy goods imports accelerated 15.9% yoy on the back of vehicles (+81% yoy), machinery (+23% yoy) and chemicals (+17% yoy). 

Finally, exports to the EU started growing, inching up 0.7% yoy in 4M16. Meanwhile, exports to the CIS countries kept plunging in the double digits, or 34.9%.

Alexander Paraschiy: The improved external accounts in April looks like a one-off effect. From the data available, the trend with deficit expansion has yet to be broken. In particular, exports improved only slightly in yoy terms, and that was solely due to the farming sphere (+28% yoy for grains and +29% yoy for seed oil). Meanwhile, metals and machinery exports dropped 18% yoy and 6% yoy respectively, despite good resource prices on the global market. Imports strengthened year-on-year, mainly due to fast expansion of non-energy imports of 28% yoy in April.

As a consequence, April’s trade balance worsened to a USD 81 mln surplus from a USD 214 mln surplus a year ago. Nevertheless, it’s a substantial improvement from March’s USD 230 mln deficit. Comparing the data month over month, we noticed only dozens of small changes without anything in particular defining the trade balance improvement. Against this backdrop, we conclude that the main trend of worsening trade balance is on track and we are keeping our trade deficit forecast at USD 3.5 bln for 2016, based on UkrStat methodology.