Ukraine C/A deficit shrinks to USD 0.3 bln in November

Ukraine’s current account (C/A) deficit shrank to USD
299 mln in November from USD 823 mln in October due to a smaller trade deficit,
the National Bank of Ukraine (NBU) reported on Dec. 29. The trade deficit
declined to USD 1.3 bln in November from USD 1.7 bln in October, while the
primary and secondary balances stayed in surplus and didn’t undergo significant
changes. In 11M18, the C/A deficit amounted to USD 4.4 bln (vs. USD 1.7 bln in
11M17).

The trade deficit shrank as goods exports swelled to
USD 4.1 bln, the highest amount since September 2014. Food exports surged 27.7%
yoy amid record-high exports of grains (in physical volume). At the same time,
metals exports plummeted 24.3% yoy (vs. 3.2% growth in October). Machinery
exports dropped 4.8% yoy (vs. a 15.8% yoy surge in October). With these uneven trends,
goods exports slowed to 6.2% yoy growth in November from 11.4% yoy in
October. 

Meanwhile, goods imports slowed to 12.7% yoy growth
(from 21.8% yoy growth in October). Machinery imports rose 23.5% yoy growth
(from 34.6% yoy growth in October). Metals imports grew 20.4% yoy (vs. 31.7%
yoy growth in the previous month).

In 11M18, goods imports rose 15.5% yoy, while exports
grew 9.6% yoy.

The financial account surplus jumped to USD 1.6 bln in
November from USD 1.0 bln in previous month. Most of the currency inflow under
the financial account was generated by the placement of 5Y and 10Y Eurobonds on Oct. 25 for 2.0 USD
bln. Meanwhile, net inflow under trade credits declined
to USD 271 mln from USD 644 mln in October.

Due to the inflow under the financial account, the
surplus of balance of payments in November jumped to USD 1.3 bln from USD 0.2
bln in October. In 11M18, the surplus of balance of payments amounted to USD
1.1 bln (vs. a surplus of USD 2.6 bln in 11M17).

Evgeniya Akhtyrko: The NBU revised significantly its C/A estimates for September-October,
as a result of which the C/A deficit in 11M18 turned out lower than what was reported for 10M18 even with the added November C/A deficit.
Nevertheless, the expected 2018 C/A deficit (around 4% of GDP) will be close to
our estimate of USD 5.1 bln, given the anticipated trade deficit growth in
December.