Ukraine's foreign trade deficit to decrease amid quarantine – central bank

The National Bank of Ukraine has improved its forecast for the deficit of Ukraine's current account of the balance of payments for 2020 to 1.7% of GDP from 3.2% projected previously, in January.

That's according to central bank governor Yakiv Smolii.

"The volume of imports of goods to Ukraine will decrease significantly more than exports," Smolii told an online briefing on Thursday. "Under worldwide quarantine and falling prices on world markets, Ukraine will reduce the volume of purchases of energy and most non-essentials. The negative effects of the pandemic on exports will be weaker, given the expected continued demand for food."

At the same time, the NBU governor believes the decrease in remittances from labor migrants will be compensated by the reduction in Ukrainians' expenses on foreign travel.

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Smolii also said that after the commerical activity is restored in Ukraine and beyond, the current account deficit will expand, again.

"This will be due to the implementation of the pent-up demand for imported goods, restoration of investment imports by businesses, as well as the expected decrease in gas transit revenues. However, the deficit will remain at 3-4% of GDP, as foreseen in the National Bank's forecast in January," Smolii said.

As UNIAN reported earlier, Ukraine's key creditor, the International Monetary Fund predicts a 7.7% drop in the country's economy this year.

The World Bank has worsened the forecast for the Ukrainian economy, expecting it to fall 3.5% by 2020.

The growth of Ukraine's real GDP in 2019 slowed from 3.4% in 2018 to 3.2%, the best indicator over the past seven years.