Ukraine C/A switches to USD 0.8 bln surplus in April

Ukraine’s current account (C/A) switched to a surplus
of USD 837 mln in April, from a USD 333 bln deficit in the prior month, due the
positive balance in trade and primary income, the National Bank of Ukraine (NBU)
preliminarily reported on May 31. The goods trade deficit shrank to USD 190 mln
from USD 931 mln, while the surplus of trade in services stayed almost flat at
USD 501 mln. The primary income balance switched to a surplus of USD 197 mln,
from a deficit of USD 312 mln in the prior month, due the decline in payments
on investment. The surplus of the secondary income declined to USD 329 mln from
USD 410 mln in the prior month.

 

In 4M21, the C/A surplus amounted to USD 1.1 bln (vs.
a USD 3.5 bln surplus in 4M20).

 

Goods imports surged 54% yoy to USD 5.1 bln in April
(vs. 26.3% yoy growth in March). In particular, imports of machinery jumped 83%
yoy, imports of mineral products advanced 45% yoy, chemical imports increased
38% yoy. Imports of foods added 30% yoy.

 

Goods exports advanced 35% yoy (vs. 24% yoy growth in
March) to USD 4.9 bln, renewing the previous month’s record-high since 2014.
The growth was mostly driven by a surge in exports of ferrous metals (65% yoy)
and mineral products (77% yoy). In addition, exports of chemicals jumped 39%
yoy, machinery exports advanced 23% yoy and food exports added 9% yoy.

 

The financial account was almost balanced out in April
with a minor deficit of USD 43 mln, vs a deficit of USD 382 mln in March. In
particular, the net foreign currency inflow from the operations of the
government sector amounted to USD 941 mln, reflecting the receipts from the
placement of international Eurobonds for USD 1.3 bln. At the same time, the net
outflow under the trade loans amounted to USD 664 mln, and the net outflow from
the banking sector was USD 203 mln.

 

The surplus of Ukraine’s balance of payments amounted
to USD 795 mln in April (vs. a USD 713 mln deficit in March).

 

In 4M21, the deficit of Ukraine’s balance of payments
amounted to USD 166 mln (vs. a surplus of USD 577 mln in 4M20).

 

Evgeniya Akhtyrko: Ukraine’s
external trade continued to boom in April, and the reinforced quarantine
restrictions during the month apparently were not an obstacle. The export receipts
are ballooning amid an incredibly favorable global price situation for iron ore
and ferrous metals. The growth of other Ukraine’s export items is also strong,
and this is not only the result of the low comparative base of the previous
year.

 

Goods imports in money terms in April were lower than
the March peak. However, the demand for imports is recovering quickly. This
trend is not intimidating as long as the price situation at the external
markets for Ukraine’s export remains favorable. However, if the latter changes,
we might see a faster enlargement of the goods trade balance resulting in worse
C/A balance than we currently expect.

 

According to our forecast, the surplus of Ukraine’s
C/A will amount to USD 0.5 bln (vs. a USD 6.2 bln surplus in 2020).