Ukraine 2019 goods trade deficit widens 9%

Ukraine’s 2019 goods trade deficit reached USD 10.7
bln, or a 8.8% yoy surge, the State Statistics Service stated in its
preliminary report on Feb. 14. Goods imports reached USD 60.8 bln, advancing
6.3% yoy, while exports amounted to USD 50.1 bln, growing 5.8% yoy.

The major contributors to import growth were road
vehicles (35.3% yoy) and machinery (11.3% yoy). Meanwhile, imports of energy
materials dropped 9.2% yoy. Export growth was driven by grains (33.1% yoy) and
mineral products (12.2% yoy). At the same time, exports of ferrous metals fell
12.1% yoy and machinery exports declined 4.1% yoy.

Imports from the EU grew 7.7% yoy in 2019, outpacing
EU export growth of 3.0% yoy. The share of the EU in Ukraine’s imports and
exports amounted to 41.1% and 41.5%, respectively.

In December alone, the goods trade deficit swelled
42.3% m/m to USD 1.3 bln from USD 0.9 bln. The seasonally adjusted goods trade
deficit enlarged 22.2% m/m amid a 4.6% m/m drop in adjusted exports and no
month-to-month change in adjusted imports.

Evgeniya Akhtyrko: The goods
trade deficit enlarged moderately in 2019. Imports grew slower than expected
mostly due to a decline in imports of energy products. At the same time, a
surge in imports of road vehicles was largely due to a mass registration of
automobiles with E.U. license plates. Many were massively imported starting
2014 but not registered by Ukrainians, who exploited loopholes in legislation
to avoid taxes and fees.

A record-high grain crop starting from 2H18 ensured
strong export growth, which helped to compensate the drop in exports of metals
caused by unfavorable prices at the global markets.

We expect the 2020 goods trade deficit (according
to UkrStat methodology) will swell to USD 11.7 bln, with import growth
outpacing export gains.