Ukraine’s current account (C/A) deficit grew to $1.1bn September from $0.4bn in August due to a deteriorated balance of primary income and increased trade deficit, the National Bank of Ukraine (NBU) reported on October 31.
The balance of primary income switched to a $102mn deficit from a $513mn surplus in August mostly due to coupon payments on international Eurobonds of $556mn during the month.
The trade deficit swelled to $1.3bn from $1.2bn due to the deteriorated balance of trade in goods. In 9M19, the C/A deficit amounted to $2.7bn (vs. $3.4bn in 9M18).
In September, the goods trade deficit swelled to $1.4bn from $1.2bn in August. Goods export growth accelerated to 11.9% y/y to reach $2.7bn (vs. a 6.3% y/y surge in August). Goods imports slowed to 2.0% y/y growth to reach $5.1bn (from 7.6% y/y growth in August). The stronger export growth was mostly due to a 29.4% y/y surge in food exports (vs. 19.8% y/y growth in August). At the same time, metal exports fell 16.0% y/y (the same decrease rate as in August). Mineral product exports rose 15.2% y/y, slowing from a 38.0% y/y surge in August.
The slower growth of goods imports was mostly due to a steep decline in imports of mineral products (19.2% y/y growth in September vs. a 3.6% y/y decline in August).
The financial account surplus enlarged to $1.2bn from $0.5bn in August. In particular, net portfolio investment switched to a surplus of $111mn in September from a deficit of $313mn in August.
The surplus of Ukraine’s balance of payments amounted to $60mn in September (vs. $130bn in August). In 9M19, the balance of payments surplus amounted to $2.2bn (vs. a $0.4bn deficit in 9M18).
“The accelerated growth of exports in September was mostly due to last year's low comparative base in food exports, which are the largest item among Ukraine’s goods exports. The growth of goods imports remains relatively weak due to lower payments for energy imports,” Evgeniya Akhtyrko of Concorde Capital said in a note. “Our current 2019 C/A deficit projection of $5.4bn is likely to be the subject of revision. Now it seems too high as goods imports are growing slower than we expected.”