Ukraine C/A switches to USD 0.2 bln deficit in September

Ukraine’s current account (C/A) switched to a deficit
of USD 211 mln in September from a surplus of USD 501 mln in August mostly due
to an enlargement of the trade deficit, the National Bank of Ukraine (NBU)
preliminarily reported on Oct. 30. The trade deficit widened to USD 372 mln
from USD 105 mln in August. The goods trade deficit enlarged to USD 767 mln
from USD 475 mln in August. The deficit of primary income account amounted to
USD 133 mln (vs. a 348 mln surplus in August), while the secondary income
account surplus amounted to USD 294 mln (vs. a 258 mln surplus in August).

In 9M20, the current account surplus amounted to USD
4.2 bln (vs. a USD 5.6 bln deficit in 9M19).

The decline of goods imports slowed down 14.8% yoy to
USD 4.5 bln in September from a 17.6% yoy plunge in August.  In particular,
imports of chemicals advanced 3.9% yoy, compared to a 4.2% yoy decline in
August. The decline of machinery imports slowed to 6.5% yoy from 13.0% yoy in
August. Food imports advanced 14.0% yoy (vs. 21.1% yoy growth in August).
Meanwhile, imports of energy products dropped 44.6% yoy (vs. 43.7% yoy in
August). In 9M20, goods imports dropped 17.1% yoy.

Goods exports inched up 1.0% yoy to USD 3.8 bln in
September after a drop of 2.1% yoy in August. In particular, exports of mineral
products surged 24.3% yoy (vs. a decline of 20.3% yoy in August). Imports of
machinery advanced 5.9% yoy (vs. a 14.3% yoy surge in August). At the same
time, food exports declined 2.6% yoy (vs. a 3.1% yoy growth in August). The
decline of ferrous metals exports slowed to 4.5% yoy (vs. a 7.6% yoy drop in
August). In 9M20, goods exports declined 5.9% yoy.

The financial account switched to a deficit of USD 1.7
bln from a surplus of USD 0.2 bln in August. The major outlay was related to the
redemption of Ukraine’s Eurobonds for USD 1.7 bln on Sept. 1.

Ukraine’s balance of payments switched to a USD 2.0
bln deficit in September from a USD 0.4 mln deficit in August. In 9M20, the deficit
of the balance of payments amounted to USD 0.5 bln (vs. a USD 2.2 bln surplus
in 9M19).

Evgeniya Akhtyrko: The C/A has
balanced out in recent months. It was positive to see some growth of goods
exports, but we don’t expect this trend to reinforce itself in the nearest
months. Low imports of energy products and weak demand for investment goods are
keeping goods imports depressed, but the decline will be slowing down amid
increasing consumer demand and demand for essential industrial products.

We do not expect dramatic changes in current trends
in Ukraine’s external accounts in the upcoming months. The current account is
likely to remain balanced out.