Ukraine C/A surplus shrinks USD 0.4 bln in July

The surplus of Ukraine’s current account (C/A) shrank
to USD 360 mln in July from USD 765 bln mln in June, the National Bank of
Ukraine (NBU) reported on Aug. 31. The trade deficit widened to USD 0.6 bln
from USD 0.2 bln in June, with the goods trade deficit swelling to USD 1.0 bln
from USD 0.8 bln in June. The primary income account reached a USD 661 mln
surplus (vs. a 688 mln surplus in June), while the secondary income account
surplus amounted to USD 310 mln (vs. a 295 mln surplus in June).

 

In 7M20, the current account surplus amounted to USD
7.0 bln (vs. a USD 2.9 bln deficit in 7M19).

 

Goods imports slid 21.6% yoy to USD 4.3 bln in July,
vs. a 16.9% yoy plunge in June. The decline was mostly due to the drop in
imports of mineral products of 45.3% yoy (vs. a 50.4% yoy fall in June) and the
decline of machinery imports of 6.6% yoy (vs. 25.4% yoy in June). Meanwhile,
food imports jumped 16.7% yoy (vs. a 6.6% yoy decline in June). In 7M20, goods
imports dropped 17.4% yoy.

 

The decline in goods exports accelerated to 15.9% yoy
to USD 3.3 bln in July from a drop of 6.7% yoy in June. In particular, the fall
in food exports accelerated to 16.1% yoy (vs. 5.0% yoy in June), the decline of
ferrous metals exports deepened to 23.3% yoy (vs. a 18.7% yoy drop in June). In
addition, exports of mineral products plunged 21.4% yoy (vs. 3.6% yoy growth in
June). At the same time, exports of chemicals accelerated to 25.7% yoy growth
(from a 18.7% yoy growth in June). In 7M20, goods exports declined 7.5% yoy.

 

The financial account deficit increased to USD 449 mln
in July from USD 211 mln in June. In particular, the net outflow on foreign
direct investment was estimated at USD 256 mln. The net foreign currency
outflow from the banking sector amounted to USD 628 mln.

 

At the same time, the net inflow from the state sector
amounted to USD 131 mln as a result of inflow generated by the placement of
international Eurobonds for USD 1.1 bln and the outflow of EUR 0.6 bln related
to the repayments on obligations to the E.U. and net payments to non-residents
on local bonds (USD 0.3 bln). The net foreign currency inflow from trade loans
amounted to USD 396 mln.

 

In July, Ukraine’s balance of payments switched to a
USD 88 mln deficit from a USD 978 mln surplus in June. In 7M20, the surplus of
the balance of payments amounted to USD 1.1 bln (vs. a USD 2.0 bln surplus in
7M19).

 

Evgeniya Akhtyrko: The
accelerated declines in both the export and import of goods in July implies
that Ukraine’s external trade is still highly affected by the corona crisis.
Most exporters and importers are not able to attain a consistent month-to-month
improvement, and their performance is quite bumpy and weak.

 

We do not expect dramatic changes in current trends in
Ukraine’s external account in the upcoming months. The current account is
likely to be around balancing out.