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5.1​ External sector overview
Ukraine’s merchandise exports increased by 5.8% to $50.1bn, while imports rose by 6.3% to $60.8bn,​ according Ukraine’s State Statistical Service ​published​ data on Ukraine’s foreign trade in 2019. Since Ukraine currently receives annual remittances of around $12bn, the trade deficit is of no concern.
The two big changes are in the structure of Ukraine’s trading partners and the makeup of its export commodities.​ Russia’s share in trade continues to fall although it remains important. Traditionally, Russia was the all-dominant trading partner accounting for about one-third of Ukraine’s total foreign trade. In 2019, by contrast, Russia was Ukraine’s third largest export market with only 6.5% of Ukraine’s exports, though it still contributed 11.5% of Ukraine’s imports, being number two after China.
The European Union has grown in importance as a trading partner with 41.5% of Ukraine’s total merchandise exports and 41.1% of its imports. As for so many countries in the world, China has suddenly become the biggest trading partner with 7.2% of Ukraine’s exports and 15.1% of its imports.
Ukraine’s export markets have become remarkably diversified in recent years.​ No one market is now dominant. China comes first with 7.2% of Ukraine’s exports, followed by Poland with 6.6%, while Russia is in third place with only 6.5%. Next is Turkey with 5.2%, followed by Italy and Germany both on 4.8%, then comes Egypt (4.5%) and India (4.0%).
This diversification of export markets reflects Ukraine’s evolving export production​. Traditionally, agricultural products and metals have matched one another at close to 40% each. Now, however, metals have sunk to 20.5%, while agricultural products have surged to 44.3%.
As the quality of Ukrainian agricultural produce has greatly improved, much of these exports are now going to Europe​, but trade ties to traditional Ukrainian agricultural markets China, Turkey, Egypt and India also remain strong.
In the past, one-third of Ukraine’s exports went to Russia. ​Much of this was in the form of machinery, which in most cases involved components for the military-industrial complex. However, both countries have now imposed severe sanctions on one another. Even so, Ukraine’s overall exports of machinery held up at 8.9%, with only a minor decrease registered in 2019.
An important old remnant is mineral production, accounting for 9.7% of Ukraine’s total exports​. Not everything is rosy. That three groups of commodities account for three-quarters of Ukraine’s total exports is of course a serious vulnerability, as commodity prices tend to fluctuate sharply.
The country structure of Ukraine’s imports stands in stark contrast with the country structure of its exports​. Here China leads with 15.1%. Russia follows with 11.5%, presumably oil and the like, with Germany in third place on 9.9%.
22​ UKRAINE Country Report​ March 2020 ​ ​www.intellinews.com