Page 32 - UKRRptMar19

5.2 Balance of payments, current account
Ukraine’s deficit in foreign trade of goods and services slightly more than doubled last year, hitting $5.8bn, reports the State Statistics Service. Exports of goods and services in 2018 grew by 8.6%, to $57bn, while imports rose by 14.3%, to $63bn, the statistics service said. Last year, the deficit in foreign trade in goods increased by 54.5%, to $10bn. By contrast, the surplus in foreign trade in services – largely IT – increased by 15.5% to $6bn.
Ukraine’s current account (C/A) deficit reached $4.7bn in 2018, swelling from $2.4bn in 2017 due to a higher trade deficit, the National Bank of Ukraine (NBU) reported on February 1. According to NBU’s estimate, the C/A deficit amounted to 3.6% of GDP in 2018 (vs. 2.2% of GDP in 2017).
The trade deficit surged to $11.5bn in 2018 from $8.6bn in 2017. In particular, goods imports increased 14.0% y/y (vs. 21.9% y/y in 2017), outpacing goods exports, which rose 9.2% y/y (vs. 18.3% y/y growth in 2017). Meanwhile, primary income balance increased to $3.2bn from $2.6bn and secondary income balance up to $3.7bn from $3.6bn.
In December alone, the C/A deficit swelled to $982mn from $962bn in November due to a decline in primary income balance to $304mn from $429mn in November. The trade deficit amounted to 1.2bn and almost didn’t change from November. Goods exports increased 4.2% y/y in December, slowing from 6.8% y/y growth in November. Food exports surged 17.0% y/y amid record-high grain exports (in physical volume). At the same time, metals exports dropped 7.3% y/y.
Meanwhile, December’s goods imports increased 1.0% y/y. Food exports surged 27.7% y/y amid record-high grain exports (in physical volume). Machinery imports rose 10.3% y/y (from 23.5% y/y growth in November). Mineral product imports declined 7.8% y/y (from 17.1% y/y growth in November).
The financial account surplus jumped to $2.2bn in December (from $1.6bn in November) reflecting a €349mn loan under the World Bank financial guarantee and €500mn loan from the EU under the MFA IV program. In addition, the private sector attracted $785mn under short- and long-term loans. The net inflow under trade credits increased to $745mn (vs. $222mn in November).
Due to the inflow under the financial account, the surplus of the balance of payments in December jumped to $1.8bn from $1.3bn in November. In 2018, the surplus of the balance of payments amounted to $2.9bn (vs. a surplus of $2.6bn in 2017).
“The 2018 C/A deficit turned out to be lower than our estimate due lower-than-expected imports in December. December’s month-to-month decline in goods imports is not typical for Ukraine. Weaker demand for foreign currency by exporters could partially explain the hryvnia's appreciation at the year end,” Evgeniya Akhtyrko of Concorde Capital said in a note. “ We expect the C/A deficit to enlarge to $5.6bn in 2019 due to the ongoing swelling of the trade deficit.”
Ukraine’s goods trade deficit jumped by 54.5% year-on-year to $9.8bn in
32 UKRAINE Country Report March 2019 www.intellinews.com