Ukraine C/A deficit reaches USD 2.1 bln in 2021

Ukraine’s current account (C/A) switched to a deficit
of USD 2.1 bln in 2021 from a surplus of USD 5.3 bln in 2020 mostly due to the
deficit of the primary balance account, the National Bank of Ukraine (NBU)
reported on Feb. 1. According to the NBU’s estimate, the C/A deficit amounted
to 1.1% of GDP in 2021 (vs. a 3.4% of GDP surplus in 2020).

 

The balance of the primary income account switched to
a deficit of USD 3.8 bln in 2021 from a surplus of USD 3.5 mln in 2020 as a
result of an enlarged deficit of investment income (USD 18.7 bln in 2021 vs.
USD 8.2 bln in 2020). In particular, the outflow related to reinvested income
in 2021 amounted to USD 4.2 bln (vs. an inflow of USD 0.5 mln in 2020).

 

The trade deficit enlarged to USD 3.0 bln in 2021 from
USD 2.4 bln in 2020 as the surplus of trade in services declined to USD 3.7 bln
from USD 4.4 bln. In particular, imports of services surged 31% yoy to USD 14.7
bln (vs. a 29% yoy decline in 2020), while exports of services picked up 18%
yoy to USD 18.3 bln (vs. 11% yoy decline in 2020). Key driver of services
exports was IT sector (export increased 38% yoy to USD 6.9 bln).

 

The deficit of the trade in goods stayed almost
unchanged in 2021, sliding to USD 6.7 bln from USD 6.8 bln in 2020. In
particular, the export of goods surged 40% yoy to USD 63.1 bln (vs. a 2%
decline in 2020), while goods imports advanced 34% to USD 69.8 bln (vs. a 21%
decline in 2020).

 

The surplus of the financial account in 2021 amounted
to USD 2.6 bln (vs. a deficit of USD 3.2 bln in 2020). The surplus of balance of
payments in 2021 amounted to 0.5 bln (vs. a USD 2.0 bln surplus in 2020).

 

In December alone, the C/A deficit shrank to USD 547
mln from USD 603 bln in November due to an enlargement of the surplus of trade
in services (to USD 651 mln from USD 539 mln in November). At the same time,
the goods trade deficit increased to USD 1.3 bln (from USD 1.2 bln in
November). The balances of the primary and secondary accounts didn’t change
significantly. The deficits of the primary and secondary accounts in December
amounted to USD 0.3 bln and USD 1.6 bln, respectively.

 

Goods exports jumped 42% yoy to USD 6.4 bln in
December, slowing from 46% yoy growth in November. In particular, food exports
surged 50% yoy (vs. 47% yoy in November), metals exports jumped 82% yoy (vs.
90% yoy in November), exports of chemicals grew 71% yoy (vs. 42% yoy growth in
November). At the same time, exports of mineral products dropped 40% yoy (vs. a
15% decline in November).

 

December’s goods imports increased 37% yoy, slowing
from 48% yoy growth in November. In particular, imports of mineral products
increased 2.2 times yoy (the same growth as in November), imports of chemicals
surged 44% yoy (vs. a 48% yoy increase in November). In addition, machinery
imports advanced 16% yoy (vs. 28% yoy growth in November), food imports picked
up 14% yoy (vs. 22% growth in November).

 

The financial account surplus amounted to USD 911 mln
in December (vs. a surplus of USD 979 bln in November). In particular, the net
foreign currency inflow under the operations of the government sector amounted
to USD 368 mln, the net FDI inflow is assessed at USD 354 mln. The net foreign
currency inflow in the banking sector amounted to USD 556 mln. At the same
time, the net outflow under the trade loans amounted to USD 242 mln.

 

The surplus of balance of payments in December
amounted to USD 366 mln (vs. a surplus of 377 mln in November).

 

Evgeniya Akhtyrko: Driven by
agricultural exports, the growth of goods exports outpaced the growth of goods
imports in December. The exports receipts from the sale of metals and chemicals
remained strong as well. The trends in goods imports in December were mostly
the same as in November, with the imports of energy products as a major driving
force.

 

We expect the deficit of Ukraine’s C/A to enlarge to
USD 4.8 bln in 2022 mostly as a result of an enlarged deficit of trade in
goods. The conditions at the eternal markets for Ukraine’s export will
deteriorate resulting in a goods exports decline of 5% yoy, while the imports
will continue to grow, picking up 5% yoy, we predict.