Ukraine goods trade deficit narrows to USD 1.4 bln in October

Ukraine’s goods trade deficit narrowed 8.5% m/m to USD 1.41 bln in October (from USD 1.54 bln in September),
the State Statistics Service stated in its preliminary report on Dec. 14. The
seasonally adjusted goods trade deficit declined 2.6% m/m amid a 0.6% m/m drop
of adjusted imports and unchanged volume of adjusted exports.

In 10M18, the trade deficit reached USD 7.9 bln, or a
67% yoy surge. Imports advanced 17% yoy, outpacing exports, which grew 10% yoy.
The major contributors to import growth were machinery (22% yoy), energy (17%
yoy), and metals (21% yoy). Export growth continued to be driven by ferrous
metals (23% yoy growth in 10M18), machinery (14% yoy), and timber (28% yoy).

Exports to the EU grew 16.1% yoy in 10M18, outpacing
import growth of 13.3% yoy. The share of the EU in Ukraine’s exports and
imports amounted to 42.4% and 40.0%, respectively.

Evgeniya Akhtyrko: The 10M18
goods trade deficit was close to our estimate of USD 8.0 bln.
The provisional customs statistics indicate that the trade deficit fell to USD
0.9 bln in November amid month-to-month export growth and import decline. This
brings the 11M18 trade goods deficit to around USD 8.9 bln.

We expect the 2018 goods trade deficit (according to UkrStat
methodology) to reach around USD 10 bln, with import growth outpacing export
increases. The growing trade deficit creates devaluation pressure on the
national currency, which we estimate will have depreciated 2.3% in 2018.