Ukraine C/A surplus swelled to USD 0.8 bln in January

Ukraine’s current account (C/A) surplus swelled to USD
797 mln in January from USD 80 mln in December, mostly due to an improved goods
trade balance, the National Bank of Ukraine (NBU) preliminarily reported Feb.
2. The January trade balance switched to the surplus of USD 260 mln from the
deficit of UAH 362 mln in December. The surplus of primary income enlarged to
USD 268 mln in January from USD 52 mln in December, the surplus of secondary
income declined to USD 269 mln from USD 390 mln.

The goods trade deficit shrank to USD 230 mln in
January from USD 913 mln in December. Goods export declined 6.3% yoy to USD 3.6
bln (vs. 17.7% yoy surge in December). The decline was mostly due to the 24.3%
yoy drop of food exports (vs. 5.5% yoy growth in December). In addition,
machinery exports dropped 3.5% yoy (vs. 3.0% yoy decline in December). At the
same time, exports of mineral products jumped 50.8% yoy (vs. 98.7% surge in
December), exports of ferrous metals advanced 8.2% yoy (vs. 30.5% yoy jump in
December),

Goods import dropped 4.2% yoy to USD 3.8 bln in
January after inching up 1.7% yoy in December. In particular, machinery imports
dropped 4.3% yoy (vs. 10.5% yoy growth in December), imports of mineral
products declined 2.9% yoy (vs. 31.5% yoy slide in December), foods imports
decreased 4.4% yoy (vs. 9.0% yoy growth in December). At the same time, imports
of chemicals advanced 5.3% yoy (after 20.6% yoy jump in December).

The financial account deficit amounted to USD 1.0 bln
in January (vs. USD 2.8 bln surplus in December). In particular, the net
outflow of the foreign currency under the trade loans amounted to USD 568 mln.
In addition, the net outflow of the foreign currency in the banking sector
amounted to USD 235 mln.

The deficit of Ukraine’s balance of payments in
January amounted to USD 220 mln (vs. a USD 906 mln surplus in January 2020).

Evgeniya Akhtyrko: Ukraine’s
external trade declined significantly in January. The growth in exports of
mineral products and ferrous metals, driven by favorable external market
conditions, didn’t compensate the fall in food exports. Import of goods is
still weak, and month-to-month swings in demand for different import items are
significant, which indicates that the demand for imported goods remains wobbly.

The further trend of export will largely depend on how
long the favorable conditions for Ukraine’s metal exports last. The volume of
imported goods will depend on the external prices of energy resources and the
demand for imported machinery.

We expect the C/A surplus to decline to USD 0.6 bln in
2021 (vs. a USD 6.5 bln surpus in 2020) due to the swelling trade deficit.