Ukraine goods trade deficit doubles yoy in 2017

Ukraine’s trade deficit in goods more than doubled in
2017 to USD 6.3 bln, the State Statistics Service reported on Feb. 15. Goods
import growth slowed to 26.4% yoy in 2017 (from 27.5% yoy in 11M17), while
export growth declined to 19.0% yoy (from 20.6% yoy in 11M17).

Energy, machinery and vehicles were responsible for
three-fourths of import growth in 2017. Specifically, imports of energy
materials surged 49%, vehicles rose 41% yoy and machinery grew 26% yoy. Other
important contributors to import growth were chemicals (17% yoy growth in 2017)
and metals (31% yoy).

The growth in goods exports was mostly due to metals
(21% yoy growth in 2017), mineral products (45% yoy) and food crops (14% yoy).

Goods exports to CIS countries slowed to 14.7% yoy
growth in 2017 from 15.6% in 11M17. Meanwhile, exports to the EU slowed less
significantly to 29.9% yoy growth in  2017 from 30.4% in 11M17.

Notably, goods exports to the EU reached a recod high
of USD 17.5 bln, exceeding pre-war levels of USD 16.7 bln in 2013.

Evgeniya Akhtyrko: The 2017
results for the goods trade deficit was exactly in line with our estimate. The
provisional customs statistics for January promise faster growth in the goods
trade deficit this year. Specifically, import growth of  30.3% yoy
outpaced export growth of 23.1%, resulting in a goods trade deficit of USD
331.1 mln that is almost four times higher than in January last year.

Imports outpacing exports will be responsible for
the 2018 goods trade deficit swelling to USD 7.0 bln (according to UkrStat
methodology), we expect. The growing trade deficit, amid a bumpy currency
inflow under the financial account, will keep the Ukrainian hryvnia under
devaluation pressure during the year.