5 October 2011
Ukraine’s current account deficit grew 2x m-o-m in August to USD 1.0 bln vs. USD 0.6 bln in July, according to preliminary data released by the National Bank of Ukraine yesterday. In 8M11, the CA deficit widened to USD 4.5 bln or 3.1% of GDP (4Q rolling) vs. USD 0.3 bln in 8M10. In August, the financial and capital account balance was in surplus at USD 1.2 bln vs. USD 0.7 bln in July. The FA surplus fully covered the CA gap, bringing the consolidated balance of payments to a USD 0.2 bln surplus. The NBU’s FX reserves amounted to USD 38.2 bln (roughly equaling 4.6 month of imports) as of August. Svetlana Rekrut: The current account deficit growth, as before, can be attributed to a continuing rise in imports (+35.5% y-o-y in August vs. 28.2% y-o-y in July) even as natural gas purchases are dropping. In August, the fastest growing sectors were machinery (+64.0% y-o-y in August vs. +51.2% y-o-y in July), chemicals (+31.5% y-o-y in August vs. +12.6% in July) and metallurgy (+46.7% y-o-y in August vs. +43.4% y-o-y in July). In August, export growth accelerated to +35.8% y-o-y vs. +26.6% y-o-y in July, driven by metallurgy (+ 46.7% y-o-y in August vs. +26.6% in July) and agricultural goods export (+17.7% y-o-y in August vs. -1.4% y-o-y in July). The financial account surplus was related to FDI growth: USD 1.0 bln in August vs. USD 0.4 bln in July. Despite high devaluation expectations in August, the UAH/USD rate continued to trade at UAH/USD 8.0. We maintain our forecast of a consolidated balance of payments at 0.5-1.0% of GDP at yearend, and the UAH/USD rate at 8.00-8.10.