Ukraine C/A deficit shrinks to USD 165 mln in November
3 January 2017
Ukraine’s current account (C/A) deficit shrunk to USD 165 mln in November (from USD 233 in October) owing to a lower trade deficit, the National Bank of Ukraine reported on Dec. 30. The trade deficit was USD 446 mln in November, following a USD 532 mln deficit in October. The C/A deficit expanded to USD 3.1 bln for 11M16.
Ukraine’s exports surged 16.0% yoy in November while imports grew 17.4% yoy through the month. Goods exports increased 15.4% yoy on the back of food (+22.1% yoy) and metals (+21.8% yoy). Commodity imports increased 17.8% yoy, reflecting mainly a 39.3% yoy increase in machinery and a 15.8% yoy rise in energy.
Ukraine’s financial and capital accounts worsened to a USD 85 mln surplus in November (from a USD 324 mln surplus in October) owing to declining trade credits (USD 344 mln outflow vs. USD 138 mln inflow in October) and lower individual cash returning to the banking system (USD 135 mln vs. USD 314 mln in October). At the same time, FDI improved to USD 132 mln compared to USD 45 mln in the prior month.
The general balance (C/A plus capital and financial accounts) was reported at a USD 80 mln deficit in November (USD 91 mln surplus in October). The deficit, coupled with declining SDRs (USD -97 mln) and gold (USD -68 mln), caused gross international reserves to fall by 1.6% (USD -244 mln). By the end of November, gross international reserves were reported at UAH 15.3 bln, or 3.6 months of future imports.
Alexander Paraschiy: External trade numbers in November were much better than we expected. The jump in exports (solely owing to food and metals) was the main surprise while imports perfectly fit our projections. The strong food exports most likely reflected a strong grain harvest.
Due to the sharp narrowing of the C/A deficit in November, we are improving our 2016 C/A estimate to a USD 3.6 bln deficit, or 4.0% of GDP (from USD 4.0 bln, or 4.5% of GDP, estimated previously).
In 2017, we expect a rollback in metal prices, which will translate into a sluggish exports performance. At the same time, imports promise to grow strongly amid recovering consumption sentiments. We expect these trends will result in a USD 5.1 bln (5.5% of GDP) C/A deficit in 2017.
