January goods trade balance improves on energy imports contraction

Ukraine’s merchandise trade balance switched into a USD 15.8 mln surplus in January 2013 from a USD 58.7 mln deficit a year ago, UkrStat reported on March 15. Exports fell 3.7% yoy while imports declined 5.1% yoy for the month.

Alexander Paraschiy: The better January trade figures can hardly be seen as evidence of improved economic trends. Imports fell mainly because of a 20.3% yoy decline in hydrocarbon purchases, which we believe was caused primarily by growing shadow fuel imports and stopped production at domestic oil refineries. A 3.2% yoy decline in natural gas imports might be a positive trend but we still expect the gas bill to remain flat by the end of the year. Non-energy imports kept growing through the month at 5.2% yoy, which is in line with our estimates.

On the exports side, we see increased supplies of grain (+6.2% yoy), chemical (+22.1% yoy) and machinery equipment (+9.1% yoy) as the main factor for the slowing downward trend. Yet the sharp metal exports drop (-22.3% yoy) keeps pulling overall exports down.

The January trade surplus does not change our 2013 projections. Calculations under the NBU methodology, which implicitly accounts for shadow imports, shows that the January trade balance was at a USD 356 mln deficit (almost flat yoy). Thus, we keep our forecast for the trade deficit at USD 20.6 bln (NBU methodology) and USD 16.0 bln (UkrStat methodology –excluding shadow trade) by the year’s end.