Ukraine C/A switches to USD 0.8 bln surplus in October

Ukraine’s current account (C/A) switched to a USD 817
mln surplus in October from a USD 195 mln deficit in September due to a reduced
trade deficit and positive balance of primary account income, the National Bank
of Ukraine (NBU) preliminarily reported on Nov. 30. The October trade deficit
was almost balanced with an insignificant deficit of USD 26 mln, compared to a
USD 326 mln deficit in September. The goods trade deficit shrank to USD 484 mln
from USD 475 mln in September. The primary account income balance switched to a
USD 530 mln surplus from aUSD 167 mln deficit in the prior month amid a reduced
deficit of income from investment.

In 10M20, the current account surplus amounted to USD
5.1 bln (vs. a USD 6.2 bln deficit in 10M19).

The fall in goods imports accelerated to 19.6% yoy (as
imports amounted to USD 4.7 bln) in October after a 16.2% yoy plunge in
September. In particular, the decline in machinery imports accelerated to 17.9%
yoy from 6.5% yoy in September. Imports of energy products dropped 50.7% yoy
(vs. 51.9% yoy in September). At the same time, imports of chemicals advanced
5.3% yoy from 3.0% yoy in September. Food imports advanced 11.0% yoy (vs. 13.9%
yoy growth in September). In 10M20, goods imports dropped 17.5% yoy.

Goods exports slid 0.1% yoy to USD 4.2 bln in October
after advancing 1.5% yoy in September. In particular, the decline in food
exports intensified to 6.5% yoy (from a 2.6% yoy decline in September). At the
same time, exports of mineral products surged 61.4% yoy (from 24.3% yoy growth
in September). The decline of ferrous metals exports slowed to 2.1% yoy (vs. a
4.5% yoy drop in September). In 10M20, goods exports declined 5.2% yoy.

The financial account deficit amounted to USD 1.2 bln
in October (vs. a USD 1.8 bln deficit in September). The net outflow related to
the government sector amounted to USD 174 mln, including the net payments to
nonresidents on local bonds of USD 147 mln. The volume of cash foreign currency
outside the banking system swelled by USD 529 mln. Net outflow under trade
loans amounted to USD 256 mln.

Ukraine’s balance of payments deficit amounted to USD
0.3 bln in October (vs. a USD 2.0 mln deficit in September). In 10M20, the
balance of payments deficit amounted to USD 0.8 bln (vs. a USD 2.1 bln surplus
in 10M19).

Evgeniya Akhtyrko: As we expected, the C/A
remains in balance. The fluctuations in food exports are impeding a consistent
improvement in goods exports. Low imports of energy products and weak demand
for investment goods are keeping goods imports depressed, outweighing quite
high demand for imported food and some essential industrial products.

We do not expect dramatic changes in current trends
in Ukraine’s external accounts in the upcoming months. The current account is
likely to remain balanced out.