Trade balance widens on metal exports contraction in December

In December, Ukraine’s merchandise trade deficit surged to USD 2.2 bln from USD 1.4 bln in the same year-ago month, according to UkrStat data released on Feb. 14. Exports fell 13.6% yoy while imports decreased only 1% yoy in the month.As a result, the final 2012 trade deficit reached USD 15.9 bln, with import growth (2.5%) exceeding export growth (0.6%), a negative trend that has maintained itself over the last eight years.

Alexander Paraschiy: The sharp trade deficit expansion in December exceeded our estimates. We did not expect metal exports to slump 30.7% yoy against a backdrop of increasing metal prices. Even continued food export growth (+33.2% yoy) and sliding energy imports (-17.2% yoy) did not restrict the trade deficit from widening. We expect the NBU will provide for a hryvnia weakening by the middle of the year, which should cut import growth and underpin exports. If that happens, we should not expect the trade deficit to exceed UAH 16.0 bln by the year’s end.