Page 23 - UKRRptFeb20

5.2​ Balance of payments, current account
The strong hryvnia has depressed the hryvnia value of Ukraine’s export revenues, contributing to a $1.6bn gap ​between revenue projections and the amount actually collected, reports Bloomberg in an article titled: “World-Beating Currency Gives Ukraine a Budget Headache.”
The government has ordered the Finance Ministry to reduce some development spending, reports Ekonomichna Pravda news site, citing documents it obtained. The IMF insists that the government budget deficit stays below 2% of GDP. In 2019, it was $3bn, or 1.8% of GDP.
Ukraine’s goods trade deficit shrank to $0.9bn in November ​from $1.3bn in the prior month, the State Statistics Service said in its preliminary report published on January 14. The seasonally adjusted goods trade deficit narrowed to $0.75bn from a $0.87bn deficit in October, amid a 5.3% m/m decline in adjusted imports and 3.7% m/m fall in adjusted exports.
In November, goods exports declined 2.8% y/y to $4.3bn (vs. a 7.3% y/y increase in October). In particular, exports of ferrous metals dropped 13.9% y/y (vs. a 8.7% y/y decline in October). Exports of mineral products plummeted 18.2% y/y (vs. a 11.7% y/y decline in October). In addition, grain export slid 3.8% y/y (vs. 19.9% y/y growth in October).
Goods imports decreased 1.8% y/y to $5.2bn in November (vs. 2.3% y/y growth in October). In particular, the decline in imports of energy products deepened to 25.0% y/y (vs. a 12.0% y/y drop in October). Growth in machinery imports slowed to 3.4% y/y in November (from 9.1% y/y growth in October). Meanwhile, imports of road vehicles and aircraft rose 34.2% y/y (vs. 27.8% y/y in September).
In 11M19, the merchandise trade deficit reached $8.5bn, swelling 5.7% y/y. Goods exports advanced 6.3% y/y to $46.0bn. Meanwhile, goods imports rose 6.2% y/y to $55.3bn.
Exports to the EU increased 4.4% y/y in 11M19, while EU imports advanced 7.5% y/y. The share of the EU in Ukraine’s exports and imports amounted to 41.8% and 41.1%, respectively.
While Ukraine runs a trade deficit of about $1bn the current account is a lot more balanced​ and posted a $57mn surplus in November, the most recent data, after running deficits of around half a billion dollars in most months earlier in the year.
The current account is bolstered by circa $14bn of remittances expat workers send home, aid from the international financial organisation and circa $4bn of inflows into the domestic bond market by foreign bond traders.
23​ UKRAINE Country Report​ February 2020 ​ ​www.intellinews.com