Ukraine C/A surplus reaches USD 0.6 bln in January

Ukraine’s current account (C/A) surplus reached USD
590 mln in January, the National Bank of Ukraine (NBU) reported on March 3. External
trade was almost balanced in January, with an insignificant deficit of USD 6
mln (vs. the trade deficit of USD 1.2 bln in December). In particular, the
goods trade deficit dropped to USD 131 mln from USD 1.2 bln in December due to
a drop in goods imports.

Goods imports declined 1.7% yoy to USD 3.9 bln, while
goods exports increased 2.3% yoy to USD 3.9 bln. Imports of machinery slid 0.3%
yoy (vs. a 15.4% yoy surge in December). The decline in imports of mineral
products was reinforced at 19.0% yoy from 14.8% yoy in December. In addition,
imports of chemicals dropped 3.2% yoy (vs. 6.3% yoy growth in December).

The growth of goods exports was driven by food, which
advanced 14.3% yoy (vs. 15.7% yoy growth in December). Exports of mineral
products jumped 14.3% yoy (vs. a 8.3% yoy decline in December). In addition,
machinery exports surged 33.9% yoy (vs. 10.5% yoy growth in December).
Meanwhile exports of metals fell 26.4% yoy (vs. a 27.0% yoy decline in
December).

The January financial account surplus fell to USD 315
mln (vs. USD 894 mln in December). The major currency inflow under the
financial account came from the placement of 10-year Eurobonds for EUR 1.25 bln on
Jan. 22.  In addition, net FDI inflow amounted to USD 201 mln. Meanwhile,
the net increase of the external position in banks amounted to USD 1.5 bln. Net
foreign currency outflow under trade credits amounted to USD 366 mln.

The surplus of Ukraine’s balance of payments in
January amounted to USD 906 mln (vs. a deficit of USD 68 mln in January 2019).

Evgeniya Akhtyrko: The current
account switching to surplus is typical for January. The decline in machinery
imports is a somewhat worrisome development as it might be a signal of cooling
in investment demand. We expect the C/A deficit to reach USD 3.5 bln in 2020
amid a negative balance of external trade.