Ukraine trade deficit widens in July

Ukraine’s trade deficit widened 8.1% yoy in July, reaching USD 1.56 bln vs. USD 1.44 bln a year ago, according to state statistics released on September 14. Exports declined 9.4% yoy while imports decreased 5.9% yoy in July. For 7M13, the trade deficit was USD 5.8 bln, still below the 2012 result of USD 8.7 bln.

Alexander Paraschiy: The July data confirmed our expectation that 2H13 will differ drastically from 1H13 in terms of external accounts. The trade deficit grew even against the backdrop of ongoing energy import declines: natural gas imports in July were 29.3% yoy less than a year ago.

Yet Ukraine faces swelling gas imports in 2H13 as we estimate average monthly imports starting in August should be at least 60% higher than average monthly imports in 7M13 to meet Ukraine’s 27 bcm import plan for the year. That expected increase does not necessarily include the additional imports to be handled by trader Dmytro Firtash (see our September 13 news).

Against this backdrop, we are keeping our forecast for Ukraine’s 2013 trade deficit at USD 13.5 bln (UkrStat methodology), with a probable upward revision if gas imports exceed 27 bcm by the year end.