Ukraine goods trade deficit narrows to USD 694 mln in 5M16

Ukraine’s trade balance on goods reached a USD 694 mln deficit in 5M16 from a USD 881 mln deficit at the end of April, according to State Statistics Service report on July 15.  A surplus of USD 134.4 mln for 5M15 was reported in the same year-ago period. For 5M16, exports of goods decreased 11.5% yoy led by chemicals (-37.5% yoy), metals (-26.2% yoy) and minerals (-23.5% yoy). At the same time, exports of food oils increased 21.1% yoy.  Imports of goods decreased 6.2% yoy due to a 51.6% yoy energy imports plunge in 5M16. Meanwhile, non-energy imports recovered quickly with vehicles (+79.7% yoy), machinery (+27.4% yoy) and chemicals (+16.3% yoy) leading the growth. 

Exports to the EU sped up 4.5% yoy in 5M16 from 0.7% yoy growth at the end of April.  Exports to CIS countries continue plummeting, dropping 33.1% yoy in 5M16. 

Alexander Paraschiy: Delayed energy imports remain the key reason for the improved trade balance. For instance, Ukraine imported only 3 bcm of natural gas in 5M16 while the annual demand of natural gas imports is nearly 11 bcm of gas. This means that the current external trade improvement is temporary and will result in a substantial trade balance worsening in 2H16. All the other tendencies of accelerating non-energy imports and still contracting exports are in line with our initial view. Against this backdrop, we are keeping our initial forecast for the trade balance unchanged, expecting a USD 3.5 bln trade deficit for 2016, according to UkrStat methodology.