Page 44 - Eastern Europe Outlook 2020

products to the EU, behind the US at €12.4bn and Brazil at €11.8bn, and ahead of China at €6bn. In August, Ukraine’s food exports to the EU jumped by 50% y/y.
The NBU says that slower growth in the global economy and worsened terms of trade will weigh on economic growth in 2020. The 2019-2021 current account deficit will remain "acceptable". Despite the stronger hryvnia, the current account deficit in 2019 will narrow to 2.9% of GDP, thanks to an improvement in the terms of trade and the rich grain harvest.
In 2020–2021, the current account deficit will widen slightly, as a result of a decrease in natural gas transit and less favourable global commodity prices (lower iron ore prices and gradually rising energy prices).
● Banks
Ukraine’s banking sector is back in profit and starting to recover. As the charts show the sector turned the corner in third quarter of 2018 and has been making money all 2019. The sector will continue to improve in 2020.
There are still serious problems as little progress has been made in paying down the legacy non-performing loans (NPLs) from the crisis years. However, all these bad debts are now properly provisioned for and don't represent a danger to the sector. But those provisions are tying up capital and hampering banks ability to lend.
Now the sector is profitable 2020 should be the year where the bank sector gets to grips with its bad debt. Banks remain reluctant to lend to either the population or companies. Bank managers tell ​bne IntelliNews ​that part of the problem is there are not enough high quality customers to lend money to.
The last months of 2019 were profitable for banks and they had a profitable September, earning UAH4bn ($161mn) in the month to bring the cumulative earnings for 2019 to UAH48.4bn as of September.
That is a lot better than 2018. The banking sector lost money in September in the previous two years, losing UAH2.8bn and UAH2bn in 2018 and 2017 respectively. And by September 2018 the sector had only earned a meagre UAH10.9bn – a fifth as much as this year but still almost ten times more than
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