Page 36 - UKRRptFeb19

In 11M18, goods imports rose 15.5% y/y, while exports grew 9.6% y/y.
The financial account surplus jumped to $1.6bn in November from $1.0bn in previous month. Most of the currency inflow under the financial account was generated by the placement of 5Y and 10Y Eurobonds on October 25 for 2.0 $bn. Meanwhile, net inflow under trade credits declined to $271mn from $644mn in October.
Due to the inflow under the financial account, the surplus of balance of payments in November jumped to $1.3bn from $0.2bn in October. In 11M18, the surplus of balance of payments amounted to $1.1bn (vs. a surplus of $2.6bn in 11M17).
The NBU revised significantly its C/A estimates for September-October, as a result of, which the C/A deficit in 11M18 turned out lower than what was reported for 10M18 even with the added November C/A deficit. Nevertheless, the expected 2018 C/A deficit (around 4% of GDP) will be close to our estimate of $5.1bn, given the anticipated trade deficit growth in December.
Ukraine’s goods trade deficit narrowed 39.2% m/m to $0.88bn in November from $1.44bn in October, the State Statistics Service stated in its preliminary report on January 14. The seasonally adjusted goods trade deficit declined 20.6% m/m amid 4.7% m/m growth of adjusted exports and a 1.1% m/m decline of adjusted imports.
In 11M18, the trade deficit reached $8.9bn, or a 67% y/y surge. Imports advanced 16.7% y/y, outpacing exports, which grew 9.9% y/y. The major contributors to import growth were machinery (22% y/y growth in 11M18), energy (17% y/y growth), and metals (21% y/y). Export growth continued to be driven by ferrous metals (17% y/y growth in 11M18), grains (9% y/y), and machinery (12% y/y).
Exports to the EU grew 15.7% y/y in 11M18, outpacing EU import growth of 12.4% y/y. The share of the EU in Ukraine’s exports and imports amounted to 42.6% and 40.6%, respectively.
The provisional customs statistics indicate that the trade deficit will be around $1bn in December. The ever-swelling trade deficit creates devaluation pressure on the national currency, which depreciated 2.2% in 2018. Bankers expect the 2019 goods trade deficit (according to UkrStat methodology) will enlarge to $11.5mn, with import growth outpacing export increases.
36 UKRAINE Country Report February 2019 www.intellinews.com