Ukraine’s current account (C/A) deficit reached $512mn in August, shrinking somewhat from $595mn in July, the National Bank of Ukraine (NBU) reported on September 30.

The trade deficit contracted to $1.2bn from $1.4bn in the previous month. The primary income surplus amounted to $407mn (vs. $478mn in July), while the secondary income surplus was $258mn (vs. $303mn in July).

In 8M19, the C/A deficit amounted to $1.8bn (vs. $2.0bn in 8M18).

In August, the goods trade deficit swelled to $1.3bn from $1.0bn in July.

Goods exports growth slowed to 5.6% y/y to reach $4.9bn (vs. a 20.8% y/y surge in July).

Goods imports slowed to 8.2% y/y growth to reach $5.2bn (from 9.1% y/y growth in July).

The weaker export growth was mostly due to a 16.0% y/y fall in metal exports (vs. 1.2% y/y growth in July). In addition, machinery exports declined 0.8% y/y (vs. a 43.2% surge in July). Food exports slowed to 19.7% y/y growth (vs. a 36.5% y/y jump in July).

The slower growth of goods imports was mostly due to weaker growth of machinery imports (24.8% y/y growth in August vs 36.0% y/y in July).

The financial account surplus shrank to $0.6bn from $1.8bn in July. The foreign currency inflow was mostly generated by trade credits (the net inflow of $740mn) and foreign direct investment (the net inflow of $294mn).

The surplus of Ukraine’s balance of payments amounted to $130mn in August (vs. $1.3bn in July). In 8M19, the balance of payments surplus amounted to $2.2bn (vs. a $0.16bn surplus in 8M18).

“The high volume of agricultural exports and weak energy imports helped to keep the C/A deficit in moderation. However, we expect this export growth to slow through the year end owing to the high comparative base of the previous year. At the same time, the appreciation of the national currency might further fuel imports, especially among consumer goods,” Evgeniya Akhtyrko of Concorde Capital said in a note. “We project the C/A deficit to grow to $5.4bn in 2019 (vs. $4.3bn in 2018) due to the widening trade deficit.”