Preliminary data suggests that Ukraine’s balance of payments deficit  narrowed to USD 27 million in February 2017 (in January 2017 – USD 202 million), primarily reflecting an increase in the  financial account net inflows.

In February, the current account deficit widened to USD 399 million (versus USD 142 million in January) due to slower growth of merchandise exports.

 In February, merchandise exports growth slowed to 20.9% yoy (versus 52.9% in January), mainly reflecting the wearing off of a temporary low base effect in January 2015.

Instead, the pricing environment for Ukrainian exports remained favorable. Food export growth slowed to 15.9% yoy, down from 55.3% yoy in January, driven by a 11.7% yoy decline in grain exports, primarily due to a fall in global grain prices. Meanwhile, the value of exports of oil seeds increased 2.2-fold, while that of sunflower oil rose by 13.4% yoy. High global prices for steel products and a shift in the structure of metallurgical exports towards finished goods boosted exports of ferrous and non-ferrous metals by 30.6% yoy. An upswing in global iron ore prices drove up exports of mineral products  (primarily  iron ore exports), with its export in value terms doubling last year’s level. Instead, chemical exports dropped by 6.9% yoy.

Merchandise import growth slowed by half to 16.7% yoy, down from 32.6% yoy in January. In particular, energy imports were up by 53.3% yoy, driven by high natural gas imports required to end the heating season. Higher demand for oil products in the run-up to the sowing campaign was yet another contributing factor behind the increase in imports of these products.

Non-energy imports rose by 8.5% yoy (in January – by 21.1% yoy), in particular, machinery imports were up by 21.5% yoy, chemical imports increased by 7.3% yoy, and imports of  ferrous and non-ferrous metals grew by 24.5% yoy. Meanwhile, food imports were down by 3.7% yoy (In January – by 14.5% yoy).

In February, financial account net inflows (USD 368  million) were backed  by a further reduction in FX cash outside banks and an increase in debt on trade credits.

In February, net FDI inflows amounted to USD 45 million and were primarily directed to the corporate sector.

As the overall balance of payments virtually amounted to zero, as of the beginning of March, international reserves  remained practically unchanged at USD 15.5 billion, which would cover 3.3 months of future imports.

See updated data  for February 2017 under External Sector Statistics sectoin.

See the Macroeconomic and Monetary Review (March  2017), for greater details on macroeconomic developments in March, which will be published on 31 March 2017.