Ukraine’s Consolidated Balance of Payments in July this year was reported with a surplus of $2.6bn compared to a surplus of $0.97bn in June this year and a deficit of $0.3bn in July last year, the National Bank of Ukraine said on its website.
According to its data, the cumulative surplus for the first seven months of this year reached $10.37bn against a deficit of $8.40bn for the same period last year.
At the same time, the situation with the current accounts is the opposite: if in July last year its surplus of $1.40 billion was recorded, in July this year – a deficit of $0.78 billion after four months of surplus.
“The formation of the deficit is due to the expansion of the negative balance of trade in goods and services and smaller amounts of grant aid received from international partners,” explained the National Bank.
As a result, the current account deficit reached $1.95 billion in January-July this year against a surplus of $4.30 billion in January-July last year. Excluding reinvested earnings and grants from international partners, the deficit amounted to $9.1 billion, more than an order of magnitude higher than the deficit of $743 million in the first seven months of 2022.
According to the NBU, exports of goods decreased by 17.1% in July, while their imports increased by 10.2% year-on-year. Compared to the previous month, exports and imports of goods decreased by 21.1% and 1.5% respectively.
It is indicated that the volume of exports of goods amounted to $2.2 billion. Exports decreased in the following major commodity groups: food products – by 8.7% (-20.5% compared to June); mineral products (including ores) – by 38.4% (-11.0%); ferrous and non-ferrous metals – by 22.9% (-25.5%).
Machine-building products were exported 46.3% (-52.7%) less than in July last year; wood and wood products – 27.2% (-16.6%); chemical industry products – 24.2% (-16.8%). Exports of industrial products were at the level of last year, at the same time decreasing by 15.5% compared to June.
The National Bank specified that in July this year, in nominal terms, all the decline in exports of goods was provided by the reduction of their exports to the EU countries (by $478 million, or 24.9%), the share of EU countries decreased from 71.7% to 64.9%. Exports to the countries of America (by $78 mln, or 66.1%, their share decreased from 4.4% to 1.8%) and CIS countries (by $25 mln, or 16.8%, their share remained at 5.6%) also decreased. At the same time, exports to Africa (by $51 mln, or 2.2 times, their share increased from 1.5% to 4.1%) and Asia (by $15 mln, or 3.7%, their share increased from 15.1% to 18.8%) increased.
The volumes of imports of goods amounted to $5.1 billion: although energy imports decreased by 48.7% (down by 13.0% against June), non-energy imports increased by 30.1% (at the level of June).
In particular, imports of engineering products amounted to 38.5% (+0.9% vs. June); chemical products – 10.3% (+8.2%); ferrous and non-ferrous metals – 22.7% (+1.2%); food products -8.8% (-8.7%). In addition, imports of industrial products increased by 15.6% (+1.0%); wood and wood products – by 6.1% (-2.1%).
In July 2023, in nominal terms, imports from Asia (by $378 million, or 29.9%, and their share increased from 27.5% to 32.5%) and the EU (by $140 million, or 5.8%, but their share decreased from 52.4% to 50.3%) increased more. At the same time, imports from CIS countries decreased (by $115 million, or 63.9%, and their share in imports of goods fell from 3.9% to 1.3%).
The deficit of trade in services in July this year halved compared to July last year – to $614 million: exports of services increased by 12.6%, while imports decreased by 18.3%.
Exports of services grew mainly due to transportation (by 17.3% due to road and rail transport) and other business services (by 25.7%). Exports of computer services also continued to grow – by 3.1% (by 1.6% in June). Imports of services decreased primarily due to a decrease in expenditures of refugees and short-term migrants abroad – by 22.9%, to $1.4 billion. Imports of financial services also decreased – by 53.1%
Import volumes of transportation services increased by 17.3% (due to sea, rail and air transport services and postal and courier services), telecommunication and computer services – by 23.7% and other business services – by 1.8 times.
As reported by the National Bank, the primary income balance surplus narrowed to $669 million (July 2022 – $879 million). This was due to a simultaneous decrease in receipts under the item “remuneration of labor” (by 5.2%) and an increase in payments on income from investments, including at the expense of reinvested income, which amounted to $194 million (in July 2022, negative reinvested income amounted to $40 million).
The secondary income balance surplus totaled $2.0 billion and was generated primarily by grant receipts of $1.3 billion (July 2022 surplus was $3.7 billion and grant receipts were $2.7 billion).
The volume of private remittances, according to the NBU, decreased by 5.8% to $939 million: wages received by Ukrainians from abroad increased by 2.9%, while other private remittances received through official channels fell by 22.0%. Overall, official channels sent 11.2% less remittances than in July last year, while the flow through informal channels increased by 0.9%.
Total remittances decreased by 10.2% in January-July 2023, including: net compensation of employees by 9.0% and private transfers by 12.9%.
Net borrowing from the outside world (total current and capital account balances) amounted to $764 million, as noted by the National Bank, compared to net lending of $1.4 billion in July 2022.
In total, net borrowing from the outside world amounted to $1.9 billion in the first seven months of 2023, compared to net lending of $4.4 billion in the corresponding period last year.
Net inflows on the financial account amounted to $3.3 billion in July this year against a net outflow of $1.7 billion in July last year and were primarily driven by inflows from public sector operations.
In total, for the first seven months of 2023, net inflows on the financial account amounted to $12.2 billion, compared to a net outflow of ;12.8 billion in the same period last year.
It is specified that the net inflow on public sector operations in July was $3.2bn compared to an outflow of $196m in July last year and was due to net inflows on loans from international partners amounting to $3.1bn. At the same time, net inflows on government bonds amounted to $14m.
The National Bank estimated net inflows of foreign direct investment at $403 mln in July, compared to $150 mln in July 2022. Including reinvestment of banking sector earnings amounted to $194 mln; net equity capital inflow (excluding reinvestment of earnings) – $114 mln; net attraction on debt instruments – $94 mln, including $20 mln on loans of sister companies (in July 2022 – $95 mln, including $19 mln on loans of sister companies).
For the first seven months of 2023, the National Bank estimates net FDI inflows at $2.2 billion (including reinvestment of earnings – $1.6 billion), while for the first seven months of 2022, net outflows totaled $141 million (including reinvestment of earnings – $1.6 billion). In the first seven months of 2022, net outflows totaled $141 million (including reinvestment of earnings – $415 million).
Net equity inflows (excluding reinvestment of earnings) amounted to $399m in January-July ($185m in sevenM 2022), while net borrowings on debt instruments amounted to $371m (net repayments of $658m in sevenM 2022).
The NBU added that the net increase in the external position on banks’ operations on portfolio and other investments in July amounted to $151 million (in July last year – $391 million): net purchase of non-resident securities by banks in the amount of $250 million was partially offset by a net decrease in the external position on “currency and deposits” in the amount of $101 million.
The net increase in the external position of the real sector (excluding foreign direct investment) amounted to $112 million ($1.4 billion in July last year) and was due to multidirectional factors: an increase in the volume of cash currency outside banks by $593 million ($776 million in July 2022) with a simultaneous decrease in the net external position on trade credits by $506 million.
In January-June 2023, the National Bank estimated the growth of cash currency outside banks at $6.6 billion, while in the corresponding period of 2022 – at $5.9 billion.
