Ukraine goods trade deficit enlarges to USD 1.2 bln in July

Ukraine’s goods trade deficit reached USD 1.2 bln in
July, increasing from USD 1.1 bln in Julne, the State Statistics Service said
in its preliminary report on Sept. 13. The seasonally adjusted goods trade
deficit amounted to USD 1.0 bln (shrinking from a USD 1.1 bln deficit in June)
amid a 5.7% m/m increase in adjusted exports and 1.8% m/m growth in adjusted
imports.

In July, goods exports surged 18.3% yoy to USD 4.3 bln
(vs. a 5.9% decline in June). In particular, grain exports jumped 60.3% yoy
growth (from 6.1% yoy growth in June). In addition, mineral product exports
increased 34.4% yoy (vs. 20.3% yoy growth in June). On top of that, machinery
exports advanced 16.7% yoy (vs. a 19.7% yoy decline in June) while ferrous
metal exports inched up 2.0% yoy (vs. 24.0% yoy drop in June).

Goods imports amounted to USD 5.5 bln, accelerating to
8.3% yoy growth in July  (vs. 4.1% yoy growth in June). As in June, the
growth was mostly driven by machinery, road vehicles and aircraft. In
particular, machinery imports accelerated to 26.5% yoy growth (from 17.0% yoy
growth in June) while imports of road vehicles and aircraft sped up to 57.9%
yoy growth (from 36.1% yoy in June). Meanwhile, energy product imports
continued to decline, dropping 17.4% yoy (vs. a 16.0% yoy decline in June).

In 7M19, the trade deficit reached USD 4.9 bln,
enlarging 18.5% yoy. In 7M19, goods exports advanced 7.0% yoy to USD 28.7 bln.
Meanwhile, goods imports rose 8.5% yoy to USD 33.7 bln.

Exports to the EU increased 7.8% yoy in 7M19, while EU
imports advanced 9.0% yoy. The share of the EU in Ukraine’s exports and imports
amounted to 42.4% and 41.9%, respectively.

Evgeniya Akhtyrko: The
situation with external trade in goods improved significantly in July due to a
sharp advance in goods exports. However, we don’t expect this improvement in
goods exports to remain consistent through the year end. Grain export growth
will be weaker due to the high comparative base of the previous year.
Meanwhile, machinery exports are highly inconsistent from month to month. The
growth in metal exports is a positive sign, but it’s not clear if it will
remain consistent.

The provisional customs statistics released this month
promise that August’s goods trade deficit will shrink to around USD 0.8 bln,
mostly due to the lower value of imports.

We expect the 2019 goods trade deficit (according
to UkrStat methodology) to swell to USD 11.5 bln (from USD 9.9 bln in 2018), with
import growth outpacing export gains.