Foreign trade deficit in goods in 7M11 is 2x larger than in 7M10

Ukraine’s foreign trade deficit in goods reached USD 6.7 bln in 7M11, 2x higher y-o-y, according to a State Statistics Committee report released yesterday. Exports grew by 40% y-o-y, and imports by 46.7% y-o-y. Svetlana Rekrut: Imports growth exceeded exports by ~7 pp mainly due to considerable growth in natural gas imports (+84.5% y-o-y, 19% of total imports) which is partially related to Ukraine’s ‘gas obligation’ to RosUkrEnergo. Machinery (14.2% of total imports) and automobiles (6.3%) grew by +67.2% y-o-y and +75.6% y-o-y, respectively. We attribute automobile industry import growth to recovering domestic consumption related to real salary growth. In 7M11, the total current account deficit was USD 3.3 bln thanks to a positive trade balance in services of USD 2.6 bln. We expect the current account deficit to stay at ~3.5% of GDP at end-2011.