Ukraine goods trade improves to USD 1.2 bln surplus in 1H15

Ukraine’s 1H15 trade balance on goods improved to a USD 1,246 mln surplus compared to a USD 407 mln surplus in the same year-ago period, according to an UkrStat report on Aug. 14.

Exports declined 35.0% yoy to USD 18.53 bln, while imports fell 38.5% yoy to USD 17.28 bln. Exports have decreased in all key segments, including vehicles (-69.9%), minerals (-55.5%), steel (-40.9% yoy), machinery (-39.7% yoy), chemicals (-32.1% yoy) and grains (-10.1% yoy). Imports have slid on the back of declining demand for vehicles (-51.9% yoy), food (-42.2% yoy), metals (-44.7% yoy), and chemicals (-29.6% yoy), in addition to the contracting natural gas bill (-46.2% yoy).

Exports to Russia plunged 59.4% yoy to USD 2.32 bln, while imports from Russia plummeted 65% yoy to USD 2.86 bln in 1H15. Exports from the partially occupied Donetsk and Luhansk regions plunged 71.2% to USD 1.90 bln. The contribution of these two regions in Ukraine’s total export declined to 10.2% in 1H15, from 23.1% in 1H14.

Alexander Paraschiy: The 1H15 statistics show some improvement in trade, as compared to 5M15, with export and import stats having improved in most sectors. The Russian aggression factor remains the key driver of negative yoy trade stats. In particular, falling exports to Russia (USD -3.4 bln yoy) and the overall drop in exports from the regions partially occupied by Russian-backed terrorists (USD -4.7 bln yoy) explain away the major part of Ukraine’s USD 10.0 bln export decline in 1H15.

We expect further recovery in both exports and imports in 2H15, as well as some worsening in the trade balance on the higher energy bill (including coal, natural gas and electricity). Still, we are keeping our goods trade balance forecast at a USD 1.9 bln surplus for 2015 (according to UkrStat methodology).