Over 2005, Ukraine’s turnover of foreign trade in goods and services made USD 79.5 bn – a 15.1% rise against 2004. Throughout the year, Ukraine was involved in foreign trade with more than 160 countries of the world. In this period, exports of goods and services added 6.4%, while import supplies were by 25.7% up. Although foreign trade balance was positive at USD 1.37 bn, for the first time in the last six years foreign trade in commodities saw import exceeding export.
Picture 1. Revenues from export of Ukrainian goods and services (USD bn)
Picture 2. Expenses for import of goods and services to Ukraine (USD bn)
Ukrainian economy is export oriented to a great extent. The country’s commodity export keeps reflecting the structure and quality indicators of its industrial sector – exports mostly cover raw stock and goods with low added value.
New trends having appeared in 2005 affected foreign trade balance of Ukraine. First of all, thanks to the new government, Ukrainian economy became much more opened, which made it more vulnerable to fluctuating conjuncture of foreign markets. Revaluation of national currency hryvnia took place – the fact, which restricted export and encouraged import supplies to the country. Finally, the steps taken in 2005 for economic reforming, smuggling fighting, as well as introduction of new customs tariffs expanded the portion of real imports in the official statistics.
Ukraine’s staple exports remain virtually unchanged over 2001-2005. The most important of them are base metals, produce of agro-industrial segment, mineral products, and chemicals.
Geographic structure of export markets is equally stable. Dominating regions for export of goods are the CIS, European Community, Eastern and Central Europe, Middle East, and Africa. The largest trade partners are Russia, Italy, Turkey, the USA, Egypt, Germany, Poland, and Syria.
Picture 3. Geography of Ukrainian export in 2005 (%)
Over the year, import outlays moved notably up as compared to revenues from Ukrainian commodities’ export. The key reason is shortage of energy carriers (oil and gas) of Ukrainian production. Import expenses for them are skyrocketing along with growing consumption volumes and world price increase.
The next determinant of import increase is high effective demand of Ukrainian population for high-quality consumption goods. The last years have evidenced rising demand for cars, large domestic appliances and durable domestic electronics, as well as high-quality upper garments and footwear. Domestic industry is still unable to fully meet internal demand, which fosters advance import growth. Demand of the local market has been determining import formation since 2003 and keeps enhancing further on.
Positive events of the last few years include higher volumes of investment import: economic modernization in the country is accompanied with new machines and mechanisms entering Ukraine, as well as communication systems and technologies being purchased.
As regards geographic pattern of the Ukrainian import, it tends to maintain the structure of 2001-2005. As before, the largest expenses related to imports from the CIS, Europe, and Eastern Asia. The most considerable volumes of goods arrived from the Russian Federation, Turkmenistan, Germany, China, Poland, Italy, Belarus, and the Republic of Korea.
Picture 4. Geography of Ukrainian import in 2005 (%)
Ukraine is now undergoing structural shifts in the economy, which will affect further activity in foreign trade. The task for today is to saturate local market with high-quality goods of domestic production in order to cut imports. This direction of Ukrainian economy is the most attractive for investing.
Prepared in accordance with the materials of the Ministry of economy of Ukraine and Derzhzovnishinform