Ukraine trade surplus reaches USD 4.3 bln in 9M14

Ukraine’s trade balance of goods and services reached a USD 4.3 bln surplus in 9M14 compared to a USD 5.9 bln deficit in the same year-ago period, according to an Ukrstat report released on Nov. 14. The main factor was a trade surplus in services (USD 3.5 bln for 9M14 excluding tolling agreements).

The goods trade balance in 9M14 improved significantly, switching to a surplus (USD 803 mln) compared to a USD 9.7 bln deficit for 9M13. The main factor was an imports slump (-25.3% yoy), compared to a relatively modest decline in exports (-7.7% yoy). Imports slid primarily on the back of declining imports of vehicles (-53.4% yoy), metals (-32.5% yoy), machinery (-24.9% yoy) and energy (-23.4% yoy). Exports suffered from falling demand for vehicles (-50.9% yoy), chemicals (-24.7% yoy), machinery (-110.6% yoy) and metals (-7.9% yoy). At the same time, exports of plant oils and food increased during the reporting period by 16.4% yoy and 9.4% yoy, respectively.

In September alone, the trade balance worsened to a USD 337 mln deficit, compared to USD 308 mln surplus in August. The result was much better than the USD 2.4 bln deficit in September 2013. The main factor in the deficit was sliding non-energy imports (to -26.8% yoy vs. -38.9% yoy in August), while the energy imports decline deepened to -55.3% yoy in September from -49.5% yoy in the prior month.

Alexander Paraschiy: In general, the external trade performance was in line with our expectations: due to the sharp devaluation of the Ukrainian currency, imports fell much faster than exports, improving the trade balance substantially. After Ukraine signed with Russia its winter natural gas agreement on Oct. 30, we should expect energy imports speeding up through November and December.

 However, the new devaluation wave (the hryvnia declined to 16 UAH/USD from nearly 13 UAH/USD at the end of October) should cut non-energy imports further, thus offsetting a large part of the energy bill increase.