Ukraine C/A deficit narrows to USD 8 mln in April

Ukraine’s current account (C/A) deficit declined to USD
8 mln in April (from USD 564 mln in March) due to a restored surplus in primary
income, the National Bank of Ukraine (NBU) reported on May 31. In the absence
of large interest payments on foreign debt, the primary account switched to a
USD 471 mln surplus from a USD 111 mln deficit in the prior month. In 4M19, the
C/A deficit amounted to USD 388 mln (vs. USD 354 mln in 4M18).

Meanwhile, the trade deficit amounted to USD 736 mln
in April, not changing much from USD 725 mln in the previous month. An enlarged
goods trade deficit (USD 933 mln in April vs. USD 777 mln in March) was
partially offset by a services surplus (USD 197 mln in April vs. USD 52 mln in
March).

The goods trade deficit swelled owing to significant acceleration
of imports. Goods imports enlarged to 14.4% yoy growth (from 5.8% yoy growth in
March), led by energy (+31.0% yoy), chemicals (+17.2% yoy) and machinery (+7.6%
yoy). Goods exports increased 2.3% yoy, slowing from 7.5% yoy growth in March.
Food and agricultural produce (+8.1% yoy), as well as mineral products (+31.5%
yoy), drove exports higher.  However, a continuing contraction in metal
exports (13.8% yoy in April) undermined the positive trend.

The April, financial and capital account switched into
the red (USD 37 mln deficit) vs. a USD 1.2 bln surplus in the prior month. In
particular, net foreign currency outflow from the banking system amounted to
USD 267 mln in April (vs. a net inflow of USD 878 mln in March).

In April, the balance of payments switched to a USD 45
mln deficit (from a USD 645 mln surplus in March). For 4M19, the balance of
payments surplus amounted to USD 284 mln (vs. a USD 18 mln surplus a year ago).

Evgeniya Akhtyrko: The current
account deficit in April substantially widened on year-on-year terms, owing to
a sharp rise in the goods trade deficit that was driven by revived energy
imports and slowed food exports. The April result is likely to commence the
traditional trend of steady C/A deficit growth afte the first quarter. With
energy imports catching up and the grain harvest still a few months away, the
positive trade statistics of the year’s start are likely to fade away soon.

We expect the C/A deficit to enlarge to USD 5.5 bln
in 2019 (vs. USD 4.5 bln in 2018) due to the growing trade deficit.