2 Feb 2024 17:49

Exports of goods and services from Ukraine in 2023 decreased 11.6%, imports increased 6.4%

MOSCOW. Feb 2 (Interfax) - The current account deficit of Ukraine's balance of payments at the end of 2023 totaled $9.8 billion (5.5% of GDP) versus a surplus of $8 billion (5% of GDP) in 2022, Ukrainian media reported, citing the National Bank of Ukraine (NBU).

"The deficit was formed due to a significant expansion of the negative balance of trade in goods, both due to a decrease in exports and an increase in imports, as well as a reduction in grant assistance from foreign partners and an expansion of payments on investment income," the NBU noted.

Excluding reinvested income and grants from international partners, the deficit was $18.4 billion compared to $6.3 billion in 2022.

The NBU said that exports of goods and services in 2023 decreased 11.6% (compared to 29.4% in 2022), while imports increased 6.4% (compared to a decrease of 1.1% in 2022).

Exports of goods in 2023 decreased 15.7% (-35.2% in 2022), to $34.5 billion. "The main factor was the reduction in exports of ferrous and non-ferrous metals by 34.2% (-62.6% in 2022) and mineral products (including ores) by 45.3% (-47.8% in 2022)," the NBU said.

Exports of food products also decreased 6.5% (-15.6% in 2022). The NBU said this was primarily due to a decrease in exports of oilseeds of 25.3% (50% increase in 2022) and grains by 9.2% (-26.2% in 2022).

There was also a decrease in exports in 2023 for other product groups: chemical products fell 21.5% (-47.4% in 2022), wood and wood products decreased 19.3% (-15% in 2022), mechanical engineering products dropped 7.5% (-40.3% in 2022), and industrial products dropped 2.4% (-39.9% in 2022).

In nominal terms, the largest drop in exports from Ukraine in 2023 was recorded in trade with the EU, which dropped $3 billion, or 12.2%, and with Asia, which fell $1.6 billion, or 16.3%. At the same time, the share of EU countries in Ukraine's exports increased 2.5 percentage points to 63.2%, while Asian countries decreased slightly, to 23.3%.

Exports to CIS countries decreased $708 million, or 31%, which led to a decrease in the corresponding share from 5.6% to 4.6%. Exports decreased $463 million or 39.1% to the American continent, and by $440 million, or 20.8% to African countries.

The volume of imports of goods to Ukraine in 2023 increased 13.9% to $63.3 billion (in 2022 they decreased 20.4%). At the same time, energy imports decreased 18.3% (- 8.8% in 2022), while non-energy imports increased 23.4% (-23.2% in 2022). Imports of mechanical engineering products increased 31.4% (-32.1% in 2022), chemical industry product imports increased 19% (-35% in 2022), food products increased 15.1% (-21.5% in 2022), ferrous and non-ferrous metals increased 31.5% (-41.1% in 2022), and wood and wood products increased 7% (-38.9% in 2022).

In 2023, in nominal terms, imports from EU countries grew the most, by $5.4 billion, or 22% (the share increased from 44.5% to 47.6%), and Asia, which increased 4.8 billion, or 30% (the share increased from 28.7% to 32.7%). Imports from the Americas also increased by $882 million, or 30.1% (the share increased from 5.3% to 6%). Imports from CIS countries decreased significantly, by $3.4 billion, or 75.2% (the share decreased from 8.1% to 1.8%).

The services trade deficit narrowed to $8.9 billion from $11.1 billion in 2022. According to the NBU, this happened primarily due to a reduction in imports of services by 8.5%, while exports of services decreased only 1.3%. Imports of services decreased due to the expenses of traveling and short-term migrants (by 10.3%), financial services (by 29.5%) and government services (by 36.4%).

At the same time, imports of transport services increased (by 18.1%, primarily due to road, rail transport and postal services), telecommunications and computer services (by 38%) and repair and maintenance services (by 2.7%).

The main factors influencing the decrease in exports of services were a decrease in exports of computer services (by 8.5%), transport (by 4.6%, mainly due to a decrease in exports of road transport services) and services for processing material resources owned by other parties (by 17.6 %).

The volume of private remittances in 2023 decreased 7.8% to $11.6 billion. Wages that Ukrainians receive from abroad fell 2.7%, while other private remittances received through official channels decreased 20.4%. Overall, 12.7% fewer money transfers were sent through official channels than in 2022, while the flow through informal channels decreased by only 1.3% compared to 2022.

Net borrowing from the outside world in 2023 (combined current and capital account balances) was $9.6 billion, up from $8.2 billion in net borrowing in 2022.

The net inflow of capital in the financial account in 2023, according to the NBU, is recorded at $19.1 billion against a net outflow of $11.1 billion in 2022. It was provided by public sector operations, partially offset by outflows from the private sector: net inflow from public sector operations increased to $25.9 billion from $13.2 billion in 2022 and was mainly due to net borrowings from international partners.

The NBU estimated the net inflow of foreign direct investment in 2023 at $4.2 billion, including reinvestment of income at $3.2 billion, while in 2022 these figures were only $213 million and $327 million, respectively.

Net outflows from private sector transactions (including errors and omissions) totaled $6.8 billion last year, down from $24.2 billion in 2022.

The volume of Ukraine's international reserves amounted, according to the NBU, to $40.5 billion as of January 1, 2024, which provides financing for future imports for 5.4 months.