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

Ukraine goods trade deficit declines 4% m/m in June
Ukraine goods trade deficit declines 4% m/m in June, on course for $7bn FY18 trade deficit
By bne IntelliNews August 17, 2018

Ukraine’s goods trade deficit declined 4.0% m/m to $599mn in June from $623mn in May, the State Statistics Service stated in its preliminary report released on August 14.

That puts Ukraine on course to end the year with a $7bn trade deficit, up from $6.3bn in 2017.

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 the first half of 2018, the trade deficit reached $2.7bn, or a 41% y/y surge.

As incomes recovery they are sucking in imports which advanced 14.5% y/y, outpacing exports, which grew 12.7% y/y. Fuelled by increasing consumer demand, foods imports surged 28.6% y/y in the first half of 2018.

Energy imports continued picking up fast, rising 8.2% y/y in the first half of 2018 from 4% y/y in 5M18. Other important imports drivers included machinery (18.8% y/y growth) and chemicals (11.6% y/y growth).

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

Exports to the EU grew 19.2% y/y in the first half of 2018, outpacing import growth of 12.4% y/y.

“The first half of 2018 goods trade deficit met our expectations. The provisional customs statistics indicate that the trade deficit will enlarge by $1.1bn in July and bring the 7M18 result to $3.8bn, keeping the pace of deficit growth at 40-42% y/y,” Evgeniya Akhtyrko of Concorde Capital said in a note. “We expect the second half of 2018 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 $7.0bn (vs. $6.3bn in 2017).”