Ukraine goods trade deficit declines 4% m/m in June

Ukraine’s goods trade deficit declined 4.0% m/m to USD
599 mln in June from USD 623 mln in May, the State Statistics Service stated in
its preliminary report released on Aug. 14. Meanwhile, the seasonally adjusted
goods trade deficit dropped 16.2% m/m, as seasonally adjusted decline of
imports (-5.1% m/m) outpaced a drop in exports (-2.6% m/m).

In 1H18, the trade deficit reached USD 2.7 bln, or a
41% yoy surge. Imports advanced 14.5% yoy, outpacing exports, which grew 12.7%
yoy. Fueled by increasing consumer demand, foods imports surged 28.6% yoy in
1H18. Energy imports continued picking up fast, rising 8.2% yoy in 1H18 from 4%
yoy in 5M18. Other important imports drivers included machinery (18.8% yoy
growth) and chemicals (11.6% yoy growth).

Export growth continues to be driven by metals (31.7%
yoy growth in 6M18), machinery (20.4% yoy), and timber (38.9% yoy). Meanwhile,
exports of oils and crops dropped 6.9% yoy and 2.3% yoy, respectively.

Exports to the EU grew 19.2% yoy in 1H18, outpacing
import growth of 12.4% yoy.

Evgeniya Akhtyrko: The 1H18
goods trade deficit met our expectations. The
provisional customs statistics indicate that the trade deficit will enlarge by
USD 1.1 bln in July and bring the 7M18 result to USD 3.8 bln, keeping the pace
of deficit growth at 40-42% yoy.

We expect 2H18 import growth will be maintained by
accelerated growth of energy products, while high consumer demand will cause the
share of food in imports to grow. Our current projection for the 2018 goods
trade deficit (according to UkrStat methodology) is USD 7.0 bln (vs. USD 6.3
bln in 2017).