Improved Merchandise Trade Deficit in June.

The monthly merchandise trade deficit in June came to $288m, down from an average of $525m in Jan-May. June merchandise exports were up 17.4% yoy to $3.32 bn while imports were up 12.7% yoy to $3.61 bn, the first time this year growth in exports has outpaced growth in imports. The 1H06 deficit came to $2.9 bn, with exports of $17.4 bn (up 2.1% yoy) and imports of $20.3 bn (up 22.1% yoy). Alexander Viktorov: The improving trade picture makes it less likely that there will be a devaluation of the official exchange rate this year. Export growth dynamics has been steadily improving, reflecting growth in the world price for steel (~50% ytd), the major component of Ukraine’s export. We estimate merchandise exports will finish the year up 8% yoy and imports up 18% yoy, resulting in a merchandise trade deficit of $5.6 bn (5.5% of GDP). We project this year’s current account deficit at $1 bn (1% of GDP).