Ukraine goods deficit shrinks in half in 2M13 on less energy imports

Ukraine’s 2M13 merchandise trade deficit shrank in half to USD 902.9 mln vs. USD 1.85 bln a year ago, according to state statistics released on April 15. Exports increased 1.9% yoy while imports slid 6.3% yoy.

Declined energy imports (-31.0% yoy) and continued growth of agri-exports were the key factors in the improved trade balance in 2M13. Slumps in crude oil (-86.3% yoy), coal (-49.5% yoy) and natural gas (-23.2% yoy) defined the result on the imports side. At the same time, non-energy imports sped up 10.2% yoy, twice as fast as the 5-6% yoy growth we expected. Driving the exports increase was food (+27.9% yoy for 2M2013), fats and oils (20.5% yoy), chemical products (+21.4% yoy) and machinery (+4.0% yoy). They offset losses in metal (-10.8% yoy) and car exports (-12.1% yoy).

Alexander Paraschiy: On the one hand, there was a temporary contraction of energy imports (part of which went into the black market). On the other hand, the government reported acceleration in non-energy imports. In this context, we must recognize that the energy bill by the year’s end might be lower than we initially expected. However, we believe non-energy imports have all chances to offset an energy supply decline throughout the year. Thus we still project the trade deficit at USD 16.0 bln (UkrStat methodology) and USD 20.6 bln (NBU methodology) by the year’s end.