Ukraine goods trade balance switches to surplus in January

Ukraine’s goods trade balance reached a USD 21 mln surplus
in January, switching from a deficit of USD 951 mln in December, the State
Statistics Service said in its preliminary report on March 15. The seasonally
adjusted goods trade balance showed a USD 466 mln deficit (18.5% m/m decline
from a USD 572 mln deficit in December) amid 6.9% m/m growth of adjusted exports
and 3.8% m/m growth of adjusted imports.

In January, goods exports advanced 9.7% yoy and
outpaced imports, which inched up 0.7% yoy. The agricultural sector was the
major contributor to export growth. In particular, grain exports surged 59.2%
yoy. In addition, ferrous metal exports restored their growth by rising 12.3%
yoy, while finished food product exports picked up 16.0% yoy. At the same time,
exports of machinery declined 13.3% yoy.

A 12.9% yoy drop in energy resources was the major
cause of the significant slowdown of import growth. In addition, imports of
chemicals decreased 10.6% yoy. Meanwhile, the imports of road vehicles and
aircraft surged 69.2% yoy, being a major contributor to imports increasing
overall.

Exports to the EU grew 6.1% yoy in January, outpacing
EU import growth of 1.7% yoy. The share of the EU in Ukraine’s exports and
imports amounted to 44.6% and 38.9%, respectively.

Evgeniya Akhtyrko: The
improvement of the trade balance is typical for January. However, the situation
is short-lived, and provisional customs statistics released this month promise
a switch of the trade balance to a USD 0.8 bln deficit in February amid
month-to-month decreasing exports and rising imports.

As we wrote in our analysis of January’s developments in Ukraine’s current
account, the trade balance improved owing to a drop in
natural gas import volumes amid a simultaneous surge in agricultural exports.

We expect the 2019 goods trade deficit (according
to UkrStat methodology) will swell to USD 11.5 bln (from USD 9.8 bln in 2018),
with import growth outpacing export increases.