Ukraine goods trade deficit reaches USD 731 mln in February

Ukraine’s 2M16 goods trade balance worsened to a USD 731 mln deficit compared to a USD 253 mln deficit in the same year-ago period, UkrStat reported on April 14.  Exports plunged 21.3% yoy while imports fell 12.8% yoy.  Exports declined on the back of falling minerals (-40% yoy), metals (-35% yoy) and food (-18% yoy). Imports contracted only due to a 49% yoy energy bill plunge. At the same time, some import items increased like machinery (+17% yoy).  Remarkably, non-energy commodities imports increased 7% yoy in 2M16. 

Exports to the CIS countries slumped 38.7% yoy while declining rates of exports to the EU slowed to 2.1% yoy.

Alexander Paraschiy: The trade deficit is growing faster than we expected. In fact, it has already reached almost half of the USD 2.1 bln trade deficit that we estimated for the total year. To make matters worse, it was only a considerable decline in energy imports (lower natural gas import volumes and prices) that prevented the trade deficit from swelling further. Still, we aren’t rushing to revise our trade deficit forecast, mainly due to strengthening resource prices as the IMF’s Metals Index increased 11.8% in March as compared to January. What’s more, we anticipate Ukrainian exporters will gradually adjust to Russian trade restrictions (including its embargo on food imports, gas transit limits, cancelled FTA) and reorient their exports to other markets. We are sticking to our estimate of a USD 2.1 bln goods trade deficit in 2016 (according to UkrStat methodology).