Ukraine trade surplus reaches USD 0.5 bln in 5M14

Ukraine’s May goods and services trade balance was USD 182.7 mln compared to a deficit of USD 185.2 mln in the same year-ago month, Ukrstat reported on July 15. For 5M14, the trade balance was positive (USD 524.6 mln) compared to a USD 3.4 bln deficit in the same year-ago period. Growing exports (+3.9% yoy in May) on the back of surging grain (+82.2% yoy) and metal (+14.8% yoy) exports was the main reason behind the May result. Imports continued falling (-3.6% yoy) but at a much lower rate due to an upsurge in natural gas imports in May (3.7 bcm vs. 0.8 bcm a year ago). The improvement in exports was primarily due to non-Russian exports (+16.4% yoy) while exports to Russia continued shrinking (-28.5% yoy).

Alexander Paraschiy: A trade balance surplus emerged for the third straight month, which is a clear signal that the situation is improving. Going forward, a big question remains about Ukraine’s gas price, which has not been agreed to with Russia so far and provisionally assumed for the sake of state statistics to be USD 268.5 per tcm. However, even this statistical trick does not change the picture much: the potential correction (at nearly USD 360 per tcm) should not exceed USD 600 mln for April and May. The 5M14 trade balance would only turn modestly negative. What is much more important is that non-energy imports are shrinking steadily at two-digit rates (-24.7% yoy) and exports are better despite the military conflict in the east. So we see high chances for Ukraine’s trade deficit to be only USD 1.0 bln in 2014 (according Ukrstat methodology) compared to USD 13.7 bln in 2013.