Issue 25: Trade with Ukraine – I quarter, 2014

In March 2014, the volume of export (-33.3%; -5.1 mln.USD) as well as the volume of import (-4.3%; -2.1 mln.USD) decreased significantly compared to March 2013.

In the first quarter of 2014, according to the share in total export (8%), Ukraine is the fourth largest partner of Georgia. According to the share in total import (6%) , Ukraine is Georgia’s fifth partner. In 2013 Ukraine was the third largest trading partner in import (8% of total import), as well as in export (7% of total export). This change can be explained due to the crisis in Ukraine and extension of trade with Russia.

Despite the crisis, Ukraine still remains as one of the largest trading partner of Georgia. It is recommended to make the markets for export as well as for imports more diversified. The signing of the Association Agreement and its component, DCFTA, in 27 June 2014 will encourage these processes.

In 2014 the monthly dynamics of the volume of export has downward trend. In March 2014, the volume of export decreased significantly (-33.3%; -5.1 mln.USD) compared to the indicator of March 2013, while the indicators of January (144.1%, 13.8 mln. USD) and February ( 148.1%, 13.6 mln.USD)  were higher compared to the corresponding indicators in January and February 2013.

In 2014, the volume of import decreased in March (-4.3%; -2.1 mln.USD), as well as in January (-4.9%; -1.7 mln. USD) and February (-19.9%; -7.9 mln.USD) compared to the corresponding indicators in 2013.

In the first quarter of 2014, the structure of the exported commodities to Ukraine differs from the first quarter of 2013. The largest exported product is locomotives (39%). The share of mineral waters (- 5 percentage points), alcohol (-10), ferro-alloy (-9) and wines (-8) in total export decreased.

In the first quarter of 2014, the structure of imported production from Ukraine is the following : tobacco (14%), fittings (7%), coke (6%), semi-finished carbon steel (5%) and chocolate (4%). It’s noteworthy, that sugar and oil is no more among the five largest imported commodities from Ukraine,while the import of oil from Russia has significantly increased in mentioned period ( 126.9%; 1.8 mln. USD).

In the first quarter of 2014, the export of alcohol (-5.2%;- 0.4 mln. USD) as well as wine (-17%; -1 mln.USD) in Ukraine decreased significantly, which is mainly due to the decrease of export in March. 

Its noteworthy that the volume of export of liquor and alcohols had decreasing trend in 2013 too (-7.2 %; -2. 6 mln. USD).

In the same period the volume of export of mentioned commodities to Russia increased. In the first quarter of 2014 the volume of export of alcohol increased to 4.8 mln USD and the volume of grape wines increased to 33.2 mln USD.

It should be noted that the government of Ukraine is going to increase the excise tax on the alcohol ¹. As one of the largest exported commodities from Georgia to Ukraine is the alcohol,  the increase of excise tax on alcohol will affect on the local producers. But the diversification of export markets will contribute to solve this problem.

1. Ukraine – Economic situation – April 2013. U.S.-Ukraine Business Council

In 2013, the share of Ukraine in total export was 7% ( third place). In the first quarter of 2014 , the share of Ukraine in total export increased (1 percentage point), but it’s position changed and became fourth largest partner of Georgia and Russia moved to the third position.

In 2013, the share of Ukraine in total import was 8% (third place). In the first quarter of 2014, its share decreased (-2 percentage points) and became 6% (fifth place).