Ukraine C/A switches to a deficit of USD 0.4 bln in November

Ukraine’s current account (C/A) switched to a deficit
of USD 417 mln in November from a surplus of USD 106 mln in the prior month
mostly due to an enlarged goods trade deficit, the National Bank of Ukraine
(NBU) reported on Dec. 31. The goods trade deficit enlarged to USD 1.2 bln from
USD 0.6 bln in October, while the surplus of trade in services enlarged to USD
407 mln from USD 311 mln. The primary account switched to a deficit of USD 9
mln from a surplus of USD 18 mln in the prior month. The surplus of the
secondary account slid to USD 400 mln from USD 405 mln in October.

 

In 11M21 the C/A deficit amounted to USD 1.3 bln (vs.
a USD 5.6 bln surplus in 11M20).

 

Goods exports increased 46% yoy in November (vs. 39% yoy
growth in October) to USD 6.3 bln. The accelerated growth was mostly driven by
a surge in food exports (47% yoy) and exports of ferrous metals (93% yoy). In
addition, machinery exports jumped 44% yoy (vs. a 10% yoy decline in October),
chemicals exports accelerated to 42% yoy (vs. 29% yoy growth in October). At
the same time, the decline in exports of mineral products deepened 15% yoy (vs.
2% yoy decline in October).

 

Goods imports increased 48% yoy to USD 7.5 bln in
November (vs. 37% yoy growth in October). In particular, imports of mineral
products surged 2.2 times, chemical imports advanced 50% yoy, and imports of
machinery advanced 27% yoy. Food imports picked up 22%.

 

The surplus of the financial account slid to USD 793
mln from USD 963 mln in the prior month. In particular, the net inflow under
trade credits amounted to USD 779 mln, while the net foreign currency inflow in
the banking sector was USD 83 mln. The net foreign currency inflow from the
operations of the government sector amounted to USD 74 mln, while the net FDI
inflow was assessed at USD 6 mln.

 

The surplus of Ukraine’s balance of payments amounted
to USD 377 mln in November (vs. a USD 1.1 bln deficit in October).

 

In 11M21, the surplus of Ukraine’s balance of payments
amounted to USD 0.1 bln (vs. a deficit of USD 0.8 bln in 11M20).

 

Evgeniya Akhtyrko: The growth
of goods imports outpaced the growth of goods imports in November. The imports
of energy products is still the major contributor of import growth, but the
other import items picked up significantly in November. Nevertheless, the boom
of Ukrainian exports continues, driven by the abundant supply of the new
season’s crop and beneficial conditions for trade in ferrous metals.

 

We expect Ukraine’s C/A deficit to land around USD 1.5
bln in 2021 (vs. a USD 5.2 bln surplus in 2020). A growing goods trade deficit
will result in the enlargement of the CA deficit to USD 4.5 bln in 2022, we
predict.