Outrunning Côte d'Ivoire, and other specifics of Ukrainian exports

Ukraine’s State Service of Statistics has lately published the key indicators of exports for 2017.

Export victory and export betrayal

At first sight, the reports of Ukraine’s State Statistics Service contain certain reasons to boast of, however, national mass media have covered the news quite briefly, spotlighting just export to EU that has exceeded the “pre-war” level. Meantime, the sales markets of Ukrainian goods either were not mentioned or were recalled at the end of news items briefly and without going into details. Neither have Ukrainian media addressed the commodity structure of the national export trade, though there is much to learn from it. Here are some details about export achievements of the dynamically developing European economy – catch up!

Exports of Ukrainian commodities have, in fact, grown year over year and not only the exports to EU. Totaling $43.26 bln, exports increased for 19% as compared to 2016 (by about $6.9 bln). Imports in Ukraine have increased as well reaching almost $49.6bln (a 26.4% growth) in 2017. Unfavorable balance of trade has doubled, totaling $6.3 bln versus $2.8 bln a year ago.

Most of journalists avoid comparing foreign trade indicators with those of the “pre-Maidan” period. In fact, the exports in 2013 (not the best period of Viktor Yanukovych’s presidency – due to economic crisis and two months of ‘revolution’) totaled $63.3 bln. The indicators of 2017 yield to those of 2013 by one-third.

“You can postpone a war, but never trade”

As to geographical structure of Ukraine’s export, it is not as European as Ukrainian journalists have presented and as Ukraine’s government wished to see.

In fact, Ukraine’s largest export partner is the Russian Federation, the country called an “aggressor” and “occupant” by the Supreme Rada. In 2017, Russia acquired Ukrainian commodities worth nearly $4 bln (more than 9% of total export). Ukraine’s exports to Russia increased for almost 10% as compared to 2016. Yet, Ukraine buys from Russia more than sells. In 2017, import from Russia totaled $7.2bln (14.5% of total). The growth comparing to 2016 was 40%...

Ukraine manages to trade with the so-called “aggressor” and support its producers. Considering that Russian enterprises pay taxes from the $7.2bln they received from trading with Ukrainian contractors, the situation seems paradoxical. It turns out that Ukraine funds the army that allegedly wars against it.

The second and third export partners of Ukraine are Poland and Turkey ($2.7bln and $2.5 bln, respectively). These countries are far behind Russia as to the export indicators with Ukraine.

Italy is the 4th export partner of Ukraine ($2.46 bln). Then go India ($2.2 bln), China ($2.04bln), Egypt ($1.8b bln), Germany ($1.75bln), Netherlands ($1.67 bln) and Hungary ($1.35bln). Five of the seven largest export partners of Ukraine bear no relation with EU.

Besides, Ukraine is experiencing diplomatic conflicts with three of its top ten export partners (Russia, Poland, and Hungary).

Corn is the first thing…

The commodity structure of Ukraine’s exports is not less interesting.

Nominally, export of metallurgical products is prevailing over others, but practically agricultural products are dominating in export. 21.3% of export are commodities of vegetable origin (mostly grains), 10.6% are fats, 6.5% - foodstuffs, 2.6% - products of animal origin, 2.8% -timber, 1.2% - wood pulp. Actually, agricultural products make up almost half of the commodities export from Ukraine.

Besides, 9.1% of total exports are mineral products, 9.9% - machinery and equipment, 1.4% - transportation means (including ships and flying vehicles).

In fact, high-tech products with high value added tax make up a bit more than 10% of total export.

For comparison, in 2013, machinery and equipment made up 11% of total export of Ukraine, transportation means – 5.3%, products of vegetable origin – 14%, fats – 5.5%. Considering that income from equipment and vehicles is much higher than from grain and vegetable oil, the difference of export indicators of 2017 and 2013 is impressive.

Who feeds who?

The export indicators of Ukraine’s regions are quite interesting as well. Although data for 2017 have not been published yet, the data for Jan-Nov speak volumes. Formally, Kiev is the leader, but many deals are made there by corporations with legal addresses in different regions. As to regions, the undisputable leaders are Dnepr (Dnepropetrovsk) and part of Donbass under control of Kiev – 16.1% and 10.2%, respectively. Zaporozhye is on the third place – 7.2%. For comparison, export of the largest and richest region of Western Ukraine, Lvovsky, totaled just 3.7% of national export. Rovensky and Ternopolsky regions ensured by 0.9% of total national export, Chernovitsky region – 0.3%... Southeast of Ukraine still brings the largest percentage of income to the state budget.

Recalling Ivory Coast

Even a shallow analysis of the economic situation in Ukraine shows that Kiev government keeps transforming the country into an agrarian deindustrialized country. Economy of Ukraine more and more resembles economy of African countries like Côte d'Ivoire (Ivory Coast before 1986). Relying on data of CIA and WTO, export per capita in La Côte d'Ivoire yields to Ukraine just by some one-fourth. The country exports coffee and cocoa beans. As to GDP per capita, the former Ivory Coast is on the 146th place in the world (Ukraine is the 112th) and 42% of its population spends less than $1 per day. When the infrastructures Ukraine has inherited from the Soviet Union (NPPs, TPPs, HPPs, transport and communications, industrial enterprises that extremely lack modernization) fall into disrepair, the situation in Ukraine may little differ from the Ivory Coast. Located in warm climate, Côte d'Ivoire at least does not depend on export of energy resources. As Ukraine’s government is trying to feed the large energy-dependent country located in moderate climate area through development of agriculture and at the expense of science and industry, export of grain and vegetable oil to Turkey is presented as a significant European success.

Svyatoslav Knyazev