As reported by a recent report of the Intesa Sanpaolo Study and Research Centre, Ukraine's trade in 2014 amounted to 108 billion dollars (-23%). Exports (53,9 billion dollars, -15% compared to the previous year) are lower than imports (54,4 billion, -29%). The data relating to the first nine months of 2015 show a drop in both imports and exports of around 33%. The trade balance, historically negative, was -2014 billion in 0,5 due to the sharp slowdown in imports, while in the first three quarters of 2015 the decline in trade generated a surplus of +0,7 billion.
Commercial exchanges are carried out mainly with Russia (21%), Germany (6%), Poland and Belarus (5%) and Italy to follow (4%). Asia supplies about 19% and buys about 27% of the total exports, with China having almost 8% of the trade. The product detail sees the prevalence between imports of minerals (29%), machinery (17%), chemical products (12%), agro-food products (11%), rubber and plastic (7%). Important exports include agro-food products (30%), metals (28%), minerals (11%), machinery (11%) and chemical products (6%). The net balance is positive for agro-food products, metals, wood, paper and printing, while it is negative for all other categories.
However, the political and economic crisis continues to have heavy effects on the operations of Ukrainian banks, affecting total assets, down by 8% in the first 9 months of last year. The GDP, expected to drop by 11% at the end of 2015, combined with the weak quality of the loan portfolio and the capital shortage not supported by the results, lead analysts to be very cautious about the system's recovery capacity and the trend of the main variables banks in the coming years. Loans recorded a negative change in nominal terms (-1,9% last September), due to the combination of various factors such as the weakness of demand, the worsening of the solvency conditions of borrowers as well as, on the supply side, the weakness of funding and a lower willingness to grant credit. Net of the exchange rate effect, loans to the private sector show a sharp decline of approximately -36% last October.
The quality of the portfolio is very weak and is expected to worsen further: non-performing loans rose by more than 24% at the end of June and require urgent measures to clean up the balance sheets. In September, deposits fell by 1,3%, especially in households (-6,8% compared to the same period of the previous year), which cover most of the deposits to the private sector (about 70%). while in firms a positive change was maintained. Net of the exchange rate, the decrease was equal to -40% in the private sector. At the same time, recourse to foreign capital also continues to be difficult: foreign liabilities recorded a nominal increase of 21% in September, corresponding however to a decrease of more than 50% net of the exchange rate effect.
On the liquidity front, after a slight improvement recorded in 2013, the loan/deposit ratio referring to the private sector, which had reached 230% at the peak of the crisis in September 2009, started to rise again, reaching 157% at the end of September. At the aggregate level, the capitalization ratios fell significantly below 10%, the supervisory minimum, last February (from 13,8% in January to 7,37% in February), due to the effect of the depreciation of the exchange rate on the net negative position in foreign currency, the higher bad debts and the increase in provisions. The financial support of the IMF, which also plays an essential role in guiding the implementation of reforms, then becomes essential to guarantee the carrying out of banking activity in the country.
The stock of foreign productive investment (FDI) in Ukraine in 2014 amounted to $64 billion (47% of GDP). The main target sectors of FDI are, in order, those of industry, services and primary. Among the services, financial services and trade stand out, while in the primary sector the mining and extractive sector. However, the outbreak of the civil war led to a drastic drop in FDI flows (-90%). The Ukrainian manufacturing industry sees the prevalence of the agri-food sector (22%), followed by metallurgy (19%), machinery and means of transport (7%), wood, paper and printing (4%), refined petroleum products ( 4%), non-metallic minerals (3%). Hence, while the industrial production index fell by 2014% in 10, the drop was approximately 17% in the first nine months of last year.
