The NBU predicts an increase in the foreign trade deficit to $50 billion

The National Bank predicts an increase in the foreign trade deficit in 2023 to $50.9 billion after $23.8 billion in 2022. This is stated in the Inflation Report of the NBU for January.

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According to the updated forecast, the export of goods and services in 2023 will decrease to $49 billion from $57.1 billion at the end of 2022. The previous forecast assumed export growth this year to $58.5 billion.

At the same time, the import of goods and services will grow to $99.9 billion this year compared to $80.9 billion last year. Import growth to $95.1 billion was preliminarily forecast.

Money transfers

At the same time, the forecast of private money transfers to Ukraine for 2023 has deteriorated to $15.9 billion from $16.4 billion in the preliminary forecast. Last year, they amounted to $13.1 billion.

Thus, the current account deficit in 2023 will expand to $20.4 billion after a deficit of $8.6 billion last year. The previous forecast assumed a moderate reduction of the deficit to $8 billion.

The deficit of the financial account this year will amount to $13.2 billion, although earlier it was assumed to have a positive value of $1.9 billion.

The consolidated balance sheet deficit in 2023 will amount to $7.2 billion (preliminary forecast — $9.9 billion), and gross reserves will decrease to $27 billion by the end of the year from $28.5 billion at the end of 2022.

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“First, the trade deficit in goods will expand rapidly. Exports will decrease due to worse harvests and electricity shortages, and imports will increase as a result of increased demand for energy carriers and energy-efficient goods. Secondly, the expenses of forced migrants abroad will be higher than expected due to longer preservation of security risks,” the document notes.

Thus, the goods trade deficit widened significantly at the end of 2022 and amounted to $5.6 billion in the 4th quarter. According to the results of 2022, it reached the highest value since 2013 — $14.6 billion.

At the same time, the increase in the number of migrants in 2023 due to high security risks and power outages will lead to an increase in the import of travel services, which is only partially compensated by an increase in remittances, as well as a change in the resident status of migrants who have been abroad for more than a year .

The National Bank expects that from 2024, exports will increase, and Ukrainians will return more actively from abroad. However, the significant need for imports to restore the country will cause the current account deficit to persist.

Source: Ministry of Finance

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