Falling exports push Ukraine goods trade deficit to USD 1.5 bln in 8M16

Ukraine’s goods trade deficit reached USD 1.5 bln in 8M16 as the pace of falling exports in chemicals, minerals and metals exceeded declining imports, according to state statistics released on Oct. 17. A goods surplus of USD 0.56 bln was achieved in 8M15, while the deficit was USD 0.95 bln in 7M16.

Goods exports fell 9.0% yoy in 8M16 owing to chemicals (-32% yoy), minerals (-20% yoy) and metals (-19% yoy). Meanwhile, goods imports declined 0.9% in 8M16, driven by contracting trade in energy (including natural gas) which dropped 42.2% yoy. At the same time, non-energy imports were still on the upward trend, gaining 19.8% yoy in 8M16, led by vehicles (+72% yoy), machinery (+31% yoy) and chemicals (+13% yoy).

Exports to CIS countries are still falling (-27.8% yoy for 8M16) while exports to the EU kept on their upward trajectory (+4.4% yoy). 

Alexander Paraschiy: The August trade deficit expansion was in line with our initial expectations, owing to stronger energy imports (Ukraine imported 1.4 bcm of natural gas in August compared to 0.4 bcm in July) and recovering non-energy imports, offsetting still sluggish exports. We expect this trend to be maintained through the autumn months. In particular, Ukraine imported 1.5 bcm of natural gas in September (vs. 0.5 bcm monthly average in 1H16), and will import no less in the following months. We also expect non-energy imports to gain momentum amid hryvnia stability and gradually recovering private consumption. Given the current trend is exactly what we predicted, we are keeping our initial trade deficit forecast at USD 3.5 bln for 2016, according to UkrStat methodology.