Ukraine C/A deficit enlarges to USD 1.1 bln in September

Ukraine’s current account (C/A) deficit enlarged to
USD 1.1 September from USD 0.4 bln in August due to a deteriorated balance of
primary income and increased trade deficit, the National Bank of Ukraine (NBU)
reported on Oct. 31. The balance of primary income switched to a USD 102 mln
deficit from a USD 513 mln surplus in August mostly due to coupon payments on international Eurobonds of USD 556 mln
during the month. The trade deficit swelled to USD 1.3 bln from USD 1.2 bln due
to the deteriorated balance of trade in goods. In 9M19, the C/A deficit
amounted to USD 2.7 bln (vs. USD 3.4 bln in 9M18).

In September, the goods trade deficit swelled to USD
1.4 bln from USD 1.2 bln in August. Goods export growth accelerated to 11.9%
yoy to reach USD 2.7 bln (vs. a 6.3% yoy surge in August). Goods imports slowed
to 2.0% yoy growth to reach USD 5.1 bln (from 7.6% yoy growth in August). The stronger
export growth was mostly due to a 29.4% yoy surge in food exports (vs. 19.8%
yoy growth in August). At the same time, metal exports fell 16.0% yoy (the same
decrease rate as in August). Mineral product exports rose 15.2% yoy, slowing
from a 38.0% yoy surge in August.

The slower growth of goods imports was mostly due to a
steep decline in imports of mineral products (19.2% yoy growth in September vs.
a 3.6% yoy decline in August).

The financial account surplus enlarged to USD 1.2 bln
from USD 0.5 bln in August. In particular, net portfolio investment switched to
a surplus of USD 111 mln in September from a deficit of USD 313 mln in August.

The surplus of Ukraine’s balance of payments amounted
to USD 60 mln in September (vs. USD 130 bln in August). In 9M19, the balance of
payments surplus amounted to USD 2.2 bln (vs. a USD 0.4 bln deficit in 9M18).

Evgeniya Akhtyrko: The
accelerated growth of exports in September was mostly due to last year’s low
comparative base in food exports, which are the largest item among Ukraine’s
goods exports. The growth of goods imports remains relatively weak due to lower
payments for energy imports.

Our current 2019 C/A deficit projection of USD 5.4
bln is likely to be the subject of revision. Now it seems too high as goods
imports are growing slower than we expected.