OREANDA-NEWS  On 02 October was announced, that according to the National Bank of Ukraine the current account (CA) deficit decreased by USD 0.2bn to USD 7.5bn in 8M2008, related to an improvement in the service trade surplus (up 21%, m/m to USD 1.7bn). Yet the merchandise trade deficit rose by USD 0.9bn to USD 10.9bn mainly due to a slow down in export growth (up 60.9%, y/y, in August vs. 79.0%, y/y in July), which exceeded the slow down in the growth of imports (56.5% vs. 64.0%, respectively). At the same time foreign direct investment (FDI) rose by USD 8.1bn in 8M2008 (USD 6.9bn in 7M2008), 47.3% of which was directed to the banking and financial sectors. Overall, the balance of payments resulted in a surplus of USD 6.2bn.

As we predicted both exports and imports maintained high growth rates in 8M2008, despite their slight deceleration, which was mainly related to the decrease in world metallurgy and oil prices. We expect that the devaluation of the hryvnia, started in late August, will contribute to a further slow down in import growth rates, which may slightly accelerate the growth of exports, retaining a quite high merchandise trade deficit. This will result in around USD 10bn of CA deficit.