The merchandise trade deficit reached USD1.46bn in Q1’19, expanding from USD1.3bn in the same period of last year, according to preliminary figures published by the statistical office. Export growth slowed to 7.4% y/y in Q1 after 7.8% in Jan-Feb, while import growth eased to 7.9% y/y from 8.4% in Jan-Feb. In March alone, exports were up by 6.6% y/y, below the import growth of 7.1% y/y.
Metal exports were largely responsible for the slowdown as they contracted by 6.7% y/y in Q1, worsening from 4% decline in the two months of the year. On the upside, grain exports continue to perform strongly, rising by 52% y/y on the back of the good harvest and higher prices. Exports of machines and equipment remain weak, down by 3.6% y/y. On the import side, energy remains the main item, though it was down by 3.9% y/y in Q1, a result of the relatively warm winter. By contrast, vehicle imports jumped 50% y/y, reflecting not only growing demand, but also one-off effects from taxation changes.
The breakdown by market shows that exports to the EU grew below average at 3.4% y/y, reducing its share in total to 42.7%. Imports, however, were up by 10.5% y/y, most probably a result of car imports. 4% y/y in January-February, slower than in January alone, while imports from the EU jumped 10%, likely on the back of cars. Exports to Russia has fallen by 10.9% y/y and its share is now only 6.2% of total, although this is still the second highest after Poland. Imports from Russia also contracted (-6.4% y/y in Q1), again placing Russia in second place, but this time after China. The trend will continue as trade barriers between Russia and Ukraine continue to grow.