Imports of goods to Ukraine from Russia are growing faster than goods imported from the EU, but Europe is now sending twice as much in dollar terms than Russia, according to the National Bank of Ukraine (NBU).
Imports of goods from Russia were up by almost two fifths (38.6%) in the first 11 months of last year to $6.3bn, according to the NBU.
At the same time imports of goods from the EU were up by just under a quarter (23.9%) in the same period, but they were worth a total of $16.51bn.
Despite the de facto war between Russia and Ukraine the two economies remain deeply intertwined and co-dependant on trade as many Ukrainian goods that can be sold in Russia are not of sufficient quality to be sold in the EU.
While trade between Ukraine, the EU and Russia is recovering it still remains a fraction of what it was prior to the geopolitical showdown that followed the Maidan revolution in 2014.
Ukraine’s exports to Russia were also rising in the period, up by 11.9% over the period to $3.06bn, while the total trade turnover between the two rivals was up by 28.6% to $9.36bn. That compares to Russia’s total trade with the EU that is just short of $300bn a year, and with China that was just under $80bn in 2017. The deficit of Ukraine's trade with Russia over the period was $3.24bn, which is 79% worse than a year ago, reports the NBU.
Exports from the Ukraine to the EU also grew, up by a third (32.7%) to $12.77bn. The deficit of Ukraine's trade with the EU was $3.7bn – roughly the same level as the trade deficit with Russia.
The trade deficit with the EU is a function of restrictions on exports imposed by Ukraine’s Deep and Comprehensive Free Trade Area (DCFTA) deal with the EU. While this treaty is the cornerstone of Ukraine’s pivot to the West, the deal actually includes strict and very limited quotas restricting the amount of goods Ukraine can export to the EU. The DCFTA was drawn up within a protectionist framework; Ukraine’s most potent export potential is in the agricultural sector, but the EU agricultural lobby strength meant that the quotas were very limited. For example, Ukraine’s honey export quotas were used by in the first six weeks of 2017 after which imports of Ukrainian honey to the EU have to pay punitive duties.
Still, Russia’s share in Ukraine’s trade continues to fall. Russia's share of exports of goods from Ukraine fell from 9.1% to 8.5%, while of imports it grew from 12.6% to 14.3%, while the EU's share of exports rose from 31.9% to 35.3% and imports from 36.9% to 37.5%, according to the NBU.
Overall, exports of goods from Ukraine in January-November 2017 grew by 20.1%, to $36.19bn, and imports by 21.8%, to $44.03bn. The trade deficit worsened by 30.2%, to $7.84bn.