Page 7 - UKRRptAug21

2.0 Politics
2.1 Ukraine’s exports boom, current account swelling, tax revenues
rising
Ukraine’s exports are booming and the current account surplus is swelling on the back of unusually high commodity prices. The extra income will come as a welcome relief for cash-strapped Kyiv, which is wonder how it can finance an $11bn debt redemption spike in September and a large budget deficit.
The boom in Ukraine’s external trade continues, say analysts at Concorde Capital. “The export receipts are ballooning amid an incredibly favourable global price situation for iron ore and ferrous metals. The growth of Ukraine’s other export items is also strong, and this is not only the result of the low comparative base of the previous year,” Concorde said in a note.
The trade receipts are feeding through into the current account surplus that appeared last year as imports tumbled during the crisis year of 2020 and then was boosted as commodity prices took off last autumn in anticipation of this year’s recovery.
Ukraine’s current account surplus grew to $723mn in May, up from $443mn in April, reports the National Bank of Ukraine. Behind the growth was a surge in export earnings from: mineral products +188% y/y; ferrous metals + 95%; food exports + 29%; chemicals +57%; machinery + 30%.
Trade regime improves
The boost in trade and the current account is not only due to low base effects, but also driven by genuine underlying growth. Ukraine’s foreign trade in goods increased by almost 30% for the first half of this year, compared to the same January-June period last year said Taras Kachka, Ukraine’s Trade Representative, on his Facebook page, as cited by UBN.
Compared to the first half of 2019, the last ‘normal’ year, trade is up 22% and the trade deficit is down 60%, to $1.25bn, Kachka added. The highlights include:
Exports to China reached $4.28bn, nearly three times the level of 2019.
Exports to the EU reached $12.3bn, 20% higher than 2019.
Trade with Turkey changed from a deficit last year of $80mn to a surplus this year of $460mn
Ukraine continues reorientating its trade away from Russia and towards the EU, but increasingly Ukraine is casting its trade net further afield.
Ukraine’s exports to Russia plummeted by 78% from 2013 to 2019, Tymofiy Milovanov, Presidential Economic Advisor said on July 6 at the Ukraine 30 International Politics forum, as cited by UBN. During that period, Ukraine’s exports to the EU increased by 24%.
“We have increased exports to the European Union and reduced them to Russia,” he said. “But in general we have not yet been able to compensate for
7 UKRAINE Country Report August 2021 www.intellinews.com