In 2017, Ukraine sufficiently strengthened economic relations with Europe, primarily on account to exports. After a long break, Europe once again became Ukraine’s main trading partner. The matter is reviewed in the second issue of the analytical publication Working Papers focused onanalysis of the foreign merchandise trade of Ukraine with European countries in 2017.
Last year, exports of goods to European countries increased by 31% to USD 14.4 billion and exceeded the pre-crisis level of 2013. The European share in exports reached 36% and was the highest since 2004. Major increase in exports to Europe in 2017 was associated with both export volumes and favorable prices.
Ukrainian companies increased the supply to Europe primarily on account to the traditional range of raw materials (grain, oil crops, metals and ores) at the same time entering new commodity markets. This was confirmed by a hike in the penetration indices for almost all commodity groups, as well as foods, machinery products, industrial goods (penetration indices show the proportion of export countries of certain domestic goods to the total number of countries importing the said goods).
Imports of goods from European countries rose in 2017 (by 25% to USD 20.2 billion) and as a result, the share of this region increased to 41%. The growth in imports was largely attributed to Ukraine’s need to buy energy products, mainly natural gas. At the same time, despite an increase in energy imports, machinery and chemical products remained dominant in the structure of imports from Europe. Fostered machinery imports (agricultural machinery and land transport) can be associated with a rapid increase in the domestic demand, including investment demand. In particular, European countries accounted for almost half of the total machinery imports.
In general, despite positive trends in merchandise trade in Ukraine and Europe, deficit remained steady due to a high share of imported goods with high added value. However, progress in entering new markets was hampered by a long and capital-intensive process of bringing Ukrainian products in line with European standards.
All papers prepared by the NBU specialists as part of the analytical publication Working Papers were released on the NBU site in section Publications, subsection Working Papers.