All you need to know about Ukraine's foreign trade

Author : Oleksandr Okhrymenko

Source : 112 Ukraine

For 8 months of 2017, exports of goods from Ukraine grew by 21%, compared with the same period last year, while the import of goods grew by 22%
11:29, 4 October 2017

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The question about what happens to Ukraine's foreign trade could be answered in one sentence. National bank states that for 8 months of 2017, exports of goods from Ukraine grew by 21%, compared with the same period last year, while the import of goods grew by 22%; as a result, the deficit of foreign trade in goods amounted to minus 5.2 billion dollars, which is a billion more than last year. But let us see Ukraine’s foreign trade in more details to understand the situation.

Despite the growth in exports of goods this year, Ukraine’s exports for 8 months of 2017 fell by 34%, compared with the same period in 2013, and imports - by 41%. A few more figures: for the first half of 2017, exports of goods from Ukraine to the CIS countries decreased by $ 7.3 billion, compared with the same period in 2013. During the same period, Ukraine's exports to the EU increased by $ 0.32 billion. The difference is large, and this difference has a negative impact on Ukraine's exports. Ukraine's exports to the CIS countries have collapsed, while exports to the EU cannot yet fully compensate the loss of the CIS market (and in the near future will not be able to do it).

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Most of all, Ukraine delivers agricultural products and food products for export. The share of these products in country’s export for 8 months of 2017 was about 45%. Export of metal and metal products is on the second place – about 25% of Ukraine's exports. This year, the export of food and metal, compared with last year, has grown in money terms. But, if we compare the export volumes in physical terms, then the picture is somewhat different. For 8 months of 2017, Ukraine delivered for 15% more than last year in physical terms, but the export of metal fell by 18% in physical terms.

Ukrainian exports have been saved by the fact that this year, the world metal prices have increased by 43%. But grain prices do not grow that way, and it turns out that now Ukraine has to sell more and more grain abroad in order to provide itself with currency. But no one knows whether it will help us in the future. Moreover, this year's grain harvest will be at least 6-8% less than in the past, which means that the policy of "taking by quantity, not by price" might significantly fail our exporters.

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In addition to grain and metal, Ukraine sells much iron ore for export. For 8 months of 2017, about 9% of the total export of Ukraine are mineral resources, where the main thing is iron ore. And only about 7% is the share of Ukrainian machinery exports. For comparison: in 2013, the share of engineering exports in the structure of Ukraine's exports was about 25%. This is also one of the main factors that led to the fall of Ukraine's exports. A lot of products of the Ukrainian machine-building industry were supplied to the CIS countries, but now the main type of Ukrainian machinery exports are wires, bearings, and other components that Ukraine increasingly supplies to the EU, but Ukraine cannot sell the aircraft, car, even a transformer or turbine to EU countries. Quite the contrary, Ukraine mostly purchases European machinery products - from cars to machinery for food and light industry.

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It is difficult to imagine that in Germany "Mercedes" factories were closed in order to buy Ukrainian "Lanos." But even if we think more realistically, our transformers and turbines are real competitors for European companies and could well be supplied to the EU countries. Especially taking into account the fact that the prices for our machine-building products are lower than the European ones. Nevertheless, no one has canceled the competition and, most importantly, the European business lobby, which simply because of bureaucratic obstacles and all kinds of restrictions does not allow our products to enter the EU. They are ready to buy tens of tons of wires in Ukraine, then to sell cars to Ukraine with these wires. It is more profitable for them than buying ready-made engineering products in Ukraine. No one likes competitors.

Most likely, by the end of this year, exports of goods from Ukraine will surpass the level of 2016 by at least 18%. There is still demand for Ukrainian grain, and it is possible to increase export volumes due to grain and sunflower oil. Export of metal remains important, but it is difficult to increase volumes here; rather, we can expect a rise in metal prices due to rising oil prices. At large, all hope rests on the export of food.

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