Ukraine goods trade deficit increases 12% m/m in March

Ukraine’s goods trade deficit rose 12.3% to USD 482.4
mln in March from USD 429.3 mln in the prior month, the State Statistics
Service reported on May 15. Meanwhile, the seasonally adjusted goods trade
deficit declined 4% yoy given seasonally adjusted exports and imports grew 2.5%
m/m and 2.0%, respectively.

In 1Q18, the trade deficit reached USD 1.2 bln, or a
51.3% yoy surge. Imports increased 13.2% yoy, outpacing exports that grew 10.3%
yoy. Goods imports were driven by machinery (20.2% yoy), chemicals (16.4% yoy),
and metals (25.1% yoy). Meanwhile, the role of energy imports continued to
decline, shrinking 4.3% yoy in 1Q18.

Export growth was mostly due to metals (23.0% yoy
growth in 1Q18), machinery (21.8% yoy), and timber (45.5% yoy).

Exports to EU countries grew 27.4% yoy in 1Q18,
outpacing the imports growth of 11.2% yoy. Meanwhile, import growth from CIS
countries of 23.1% yoy outpaced export growth of 14.1% yoy.

Evgeniya Akhtyrko: Renewed
export growth, which outpaced the import growth in March, is a positive
development after disappointing February results.
The positive trend of declining energy imports is persisting, which may imply
that our expectation for the 2018 goods trade deficit at USD 7.0 bln (according
to UkrStat methodology) was overstated. Slower import growth will also
alleviate devaluation pressure on the national currency.

The 1Q18 goods external trade balance coincided
with our estimate of 1.2 bln. The provisional customs statistics promise the
trade deficit will swell to USD 1.5 bln for 4M18, which is about 60% higher
than a year ago.