Ukraine goods trade deficit more than doubles in 11M17

Ukraine’s trade deficit in goods swelled to USD 5.2
bln in 11M17 from USD 2.3 bln a year ago, the State Statistics Service reported
on Jan. 15. Imports increased 27.5% yoy, slightly accelerating from 27.4% yoy
10M17, while exports rose 20.6% yoy, decelerating from 20.9% yoy growth in
10M17.

Energy imports were the main source of the goods
imports increase, surging 52.5% yoy. Other essential components were vehicles (43.8%
yoy growth), machinery (17.4% yoy) and chemicals (16.5% yoy). Non-energy
imports grew 20.8% yoy in 11M17, compared to 20.6% yoy in 10M17.

Goods exports grew due to mineral products (48.8% yoy
growth), food oils (21.2% yoy), metals (20% yoy) and food crops (16.5% yoy).
Exports to the EU surged 30.4% yoy in 11M17, speeding up slightly from 30.3%
yoy in 10M17. Exports to the CIS countries jumped 15.6% yoy in 11M17, slowing
from 15.8% yoy in 10M17.

Evgeniya Akhtyrko: The goods
trade deficit was in line with our projections by the time November rolled
around.  However, provisional customs statistics are indicating an even
further swelling of the trade deficit by USD 1.1 bln in December on the back of
exports slowing to 4.1% yoy growth during the month. We estimate the 2017 trade
deficit will have been USD 6.3 bln, which far exceeds our initial projection of
USD 5.6 bln.

Given the much wider goods trade deficit in 2017,
we see the 2018 deficit touching the USD 7.0 bln mark (according to UkrStat
methodology) amid a persistent tendency of strong import growth. The widening
trade deficit will create further devaluation pressure on the local currency
this year.