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Paradoxes of Ukrainian foreign trade in I quarter of 2018

Author : Oleksandr Okhrimenko

16:32, 17 April 2018

Paradoxes of Ukrainian foreign trade in I quarter of 2018

Author : Oleksandr Okhrimenko

The beginning of the year in many ways shows the reserve and the direction of the economic movement. Most likely, by the end of the year, a small growth of Ukrainian export will be seen. And if the Ukrainian government does not engage in politicization, but economics and will understand that with the help of the Association Agreement it is possible to receive income, and not only to take loans from the EU - it is possible to actually increase exports from Ukraine not only to Poland but also to other EU countries

16:32, 17 April 2018

Read original article at 112.ua

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Ukraine's customs not only agreed but has already calculated the results of foreign trade for the I quarter of 2018. The results were very remarkable for some and sad for others. Each reader chooses for himself, which he likes more in this article.

Export of Ukrainian goods for the I quarter of 2018 amounted to 11.4 billion dollars, which is 10% more than in the first quarter of 2017, but 25% less than in the I quarter of 2013. Now, this is a paradox and in many ways very expected one. In the coming years, we can’t increase the export performance of Ukraine to the level of 2013.

Imports of Ukraine for the I quarter of 2018 amounted to 12.6 billion dollars, which is 14% more than in the first quarter of 2017, and 29% less than in the I quarter of 2013. Yes, indeed, Ukraine has reduced the purchase of energy resources, primarily natural gas, compared with 2013. But not because the economy of Ukraine has become energy efficient. And, more likely because the economy simply "cooled down" and began to demand less energy resources. Accordingly, the demand for energy imports fell. But this is the fall of the Ukrainian industry. So you have to pay for everything.

Despite all the mutual threats and insults, Russia has been and remains the main trade partner of Ukraine this year. Export of Ukraine to Russia for the I quarter of 2018 amounted to 853 million dollars, which is 8% less than in the first quarter of 2017. But the import from Russia to Ukraine for the I quarter of 2018 increased by 28% compared to the first quarter of 2017. Paradox? No, not a paradox, but coal and chemical products. Ukraine this year actively purchased coal and chemical products in Russia, as well as machine-building products, but not so actively. So it turns out that according to the words of our and Russian politicians, the Russian Federation is an  aggressor and the main enemy for Ukraine, but according to business processes often associated with representatives of Ukrainian and Russian authorities, and at the same time Ukrainian and Russian oligarchs, it is very profitable. The policy is separate from the revenues. For Russian and Ukrainian oligarchs, trade was and will be profitable. They worked and will work, and even increase the volume of transactions, but Ukrainian and Russian politicians will continue to frighten the Ukrainian and Russian people with "bad guys", and the money will still come to the hands of Ukrainian and Russian politicians.

On second place regarding importance for Ukrainian exports in the I quarter of 2018, we note Poland. The export of goods from Ukraine to Poland amounted to 816 million dollars. The level of Russia has not been overcome yet, but... It is possible that this year Poland will take the place of the Russian Federation among the main buyers of Ukrainian exports. That's really going to be a blow to the self-esteem of individual politicians and will create a certain resonance in the Ukrainian economy. Indeed, Poland is one of the few EU countries which economy really began to work more closely with the Ukrainian economy after the signing of the Association Agreement with the EU. For the I quarter of 2018, Ukraine's exports increased by 29% compared with the first quarter of 2013, before the signing of the Association Agreement with the EU. This is no longer a paradox, but a reality. What does Ukraine sell to Poland? Iron ore, rolled ferrous metals, timber, furniture and even mushrooms and honey. Although Poland badly buys Ukrainian food, but the ore is good. The production cooperation is also developing. Therefore, part of the export from Ukraine to Poland - is the production of machinery, or rather, bearings, wires and household appliances, assembled from spare parts obtained from the EU. If before, Poland was called the "apprentice of the EU", now Ukraine can be called "an apprentice of Poland".

The third place among the main buyers of Ukrainian exports has Italy, and the fourth place - Turkey. Both Italy and Turkey buy products of Ukrainian metallurgy, mainly semi-finished ferrous metals.

On the fifth place, we see India exporting sunflower oil, which is the main export commodity of Ukraine in the I quarter of 2018. In the total volume of Ukrainian exports for the I quarter of 2018, the share of sunflower oil is 9.3%. Corn is on second place of Ukrainian exports. A lot of it is bought by Spain and Holland. On the third place, there are semi-finished products of ferrous metallurgy. Here is another paradox. Or, rather, the answer to the question, what is the main thing for the economy of Ukraine. Ukraine in the world market – is the supplier of grain and ferrous metals, and this is our chip, this is what ensures the formation of our exports. So, the answer to the question, which sectors should develop the economy of Ukraine for the successful growth of GDP and the economy's incomes, is obvious. It is agrarian products and ferrous metals that is with what Ukraine conquers the world market. Keep it up.

It is clear that the first quarter is just the beginning of the year. But the beginning of the year in many respects shows the reserve and the direction of the movement. Most likely, by the end of the year, a small growth of Ukrainian export will be noticed. And if the Ukrainian government does not engage in politicization, but economics, and, finally, understands that with the help of the Association Agreement with the EU it is possible to receive income, and not only to take loans from the EU - it is possible to actually increase exports from Ukraine not only to Poland but also to other EU countries. The experience of Poland showed that you can really earn on associations with the EU, but it depends on how you work, and not telling tales of European integration. The economy is more pragmatic and requires real action, not fantasies and myths. Ukraine even decades later is unlikely to sell cars to the EU, but to produce and sell components for German and French cars is real, and this is a good business direction. This is not a paradox, but a real economy.

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