NBU expects current account deficit to be close to zero in 2022

KYIV. April 15 (Interfax-Ukraine) - The National Bank of Ukraine (NBU) expects trade indicators to worsen significantly in 2022, but the current account deficit should be close to zero, NBU Deputy Chairman Serhiy Nikolaichuk said during debates arranged by the Center for Economic Strategy.

"For the time being, taking into consideration our basic assumptions, we expect the current account deficit to be close to zero throughout this year. But [...] the outflow on the current financial account will be quite substantial," he said.

Nikolaichuk questioned the statistics published recently by the Economy Ministry, which indicated that imports dropped much more substantially than exports in March. "Judging by the payments we see, we don't see that dramatic contraction of imports and don't see exports to feel much better than imports," he said.

Growing expenditures of Ukrainian citizens abroad, which are not included in the imports statistics but can be seen in the forex payments of Ukrainian banks on Visa and Mastercard settlements are an important component, Nikolaichuk said. "These are transactions that increase the current account deficit on the balance of payments," he said.

In analyzing the current account, it should be taken into consideration that a substantial portion of imports has come to Ukraine as humanitarian aid over the past one and a half months, he said.

"We'll see trade deficit growth, but this would be compensated for by transfers on the secondary income account. That is, free humanitarian aid neutralizes the influence on the current account," he said.

It is also important to monitor revenues from IT services and transfer dynamics, as this involves various scenarios, opportunities, and risks, Nikolaichuk said.

Imports will remain depressed for quite a long time, and this is why the payment account will not look that bad, Nikolaichuk said. "But at the next stage, when we speak of the Ukrainian economy's recovery, it would be reasonable to expect the current account deficit to grow as well. However, we'll hope for financing from various sources," he said.

The World Bank said in a report on the outlook for the economies of Europe and Central Asia earlier this week it expected Ukraine's current balance of payments account deficit to reach 6.8% of GDP this year and up to 16.8% of GDP in 2023.