Ukraine current account deficit declines to USD 0.6 bln in August

Ukraine’s current account (C/A) deficit declined to
USD 601 mln in August from USD 1.1 bln in the previous month, owing to a
reduced trade deficit, the National Bank of Ukraine (NBU) reported on Sept. 28.
In 8M18, the C/A deficit amounted to USD 2.1 bln (vs. USD 0.8 bln in 8M17).

The trade deficit decreased to USD 1.2 bln in August
(from USD 1.7 bln in July), as goods imports slowed to 17.4% yoy growth (vs.
25.3% yoy growth in July). In particular, mineral product imports slowed to
15.4% yoy growth (from 33.0% yoy growth in July), while chemicals decelerated
to 5% yoy growth (from 18.2% yoy growth in July). At the same time, machinery
imports increased 20.5% yoy, accelerating from 16.0% yoy growth in July.

Goods exports rose 10.5% yoy, decelerating from 12.7%
yoy growth in July, mostly owing to slower growth of metals (11.2% yoy growth
in August from 19.9% growth in July) and chemicals (7.3% yoy growth vs. 21.1%
yoy growth in July). At the same time, mineral products exports reached 28.0%
yoy growth (from 25.8% yoy growth in July), while machinery picked up 12.1% yoy
(from a 7.1% yoy decline in July).

In 8M18, goods imports rose 15.3% yoy, while exports
grew 11.6% yoy.

Ukraine’s financial account surplus decreased to USD
625 mln in August (from USD 935 mln in the prior month), mainly because of
foreign currency outflow from the banking sector (USD 411 net outflow in August
vs. USD 86 net inflow in July). Meanwhile, the largest currency inflow was
provided by the public sector, particularly by the placement of USD 725 mln in international discount notes
on Aug. 23.

In August, the surplus of the financial and capital
account slightly surpassed the C/A deficit, bringing Ukraine’s balance of
payments to a minor surplus of USD 27 mln. In 8M18, the surplus of balance of
payments amounted to USD 164 mln.

Evgeniya Akhtyrko: As we expected, the renewed
depreciation of the national currency (by 5% in July-August) chilled the
appetite of Ukraine importers, resulting in slower import growth in August.
Very likely, this trend will extend through September as well.

We also expect food export growth will restrain the
enlargement of the C/A deficit. According to our projections, Ukraine’s C/A
deficit will reach USD 2.5 bln in 2018. Based on the recent stats, this number
looks too optimistic.