Ukraine’s exports reached $24.5 billion for the first five months of 2021, a 25% jump compared to the same period last year, according to the State Customs Service.
Prime Minister Denys Shmyhal called it an “export boom” on his Facebook and forecasted that it would grow to at least $15 billion more over the next three years.
This year, Ukraine added five more countries to its 211-trade partner list, which has contributed to “such a good result,” according to Shmyhal.
However, many experts believe today’s figures could be much higher.
Since Ukraine sells mostly raw materials — iron ore, steel, cast iron, grain, sunflower oil — its exports are mainly beneficial for other countries. Ukraine’s trading partners make finished goods out of the raw materials and then sell them at a higher price.
For instance, while the price for one ton of iron ore is $200, the price for cold rolled steel, which can be used in production of home appliances or metal furniture, is six times higher, according to Danil Getmantsev, head of the parliament’s finance and tax committee.
One ton of corn costs $300 per ton, while canned boiled corn is ten times more expensive.
Defending the government, Getmantsev said that it “keeps working on legislative initiatives to increase the share of finished products exported from Ukraine.”
Among bills already adopted by the Parliament, he named reduced import duty taxes for raw material and the law on “investment nannies” to support investors in dealing with Ukraine’s bureaucracy.
Trading partners
The European Union is a top trading partner for Ukraine — nearly 40% of the country’s exports end up there.
At the same time, the most intensive growth, almost by 50%, of this year’s exports was with four other countries: China, the United States, Turkey and the United Kingdom.
It happened for various reasons. Trade with the UK grew mainly due to Brexit, the UK’s recent withdrawal from the EU.
Since the UK started to sign trade agreements with many countries, “Ukraine took advantage of it,” said Anatoliy Amelin, director of economic programs at Ukrainian Institute of the Future, Suspilne.Media reported on June 15.
However, the figures were still modest, only $380 million, and the U.K. is “not a key trading partner.”
The reason for growing exports to China from Ukraine was another — surging demand for grain and iron ore for its infrastructure projects.
In the first two months alone, Ukraine exported products worth over $1 billion, 44% more than the last year, according to the Head of the State Food and Consumer Service Vladislava Magaletskaya.
Roaring trade?
While state officials were happy to announce positive figures for Ukraine’s export, some experts were more skeptical.
Since the beginning of the year Ukraine sold 60 million tons abroad, 20 tons less than a year ago.
Surging prices on global markets for raw materials, like iron ore and titanium, played a key role.
According to Amelin, the price for iron ore, for example, increased from $87 per ton to $225 amid the recovering global economy due to the covid-19 pandemic.
The same happened with titanium sponge, in especially high demand in China.
“Everything is relative,” said Amelin.
According to Sergiy Golovniov, a journalist at Detector Media, a media watch-dog organization under Telekritika, which monitors national and regional television news quality, such export growth mainly helps Ukrainian corporations become wealthier. Corporations like the major iron ore exporter Metinvest, owned by Ukraine’s richest man Rinat Akhmetov.
Or Kernel, which has the largest land bank in the country of 530,000 hectares. Owned by Andriy Verevsky, the agro-giant exported 5.7 million tons of corn in 2020 and set a 9.5 million tons target for 2021, the company reported.
“Oligarchs and corporations earn more profits,” wrote Golovniov in his Telegram channel. “By lobbying their interests, they do not allow tax increases; we see only investment in the production of raw materials.”
Meanwhile, import of goods also grew by 26% and reached $25.7 billion as of June. Ukraine imported cars, mineral fuels, oil products, chemicals, and various equipment.
As a result, Ukraine’s trade deficit grew to $1.3 billion, $340 million more compared to last year’s figures.
