Widespread Economic Crisis: National Bank Warns of Threats to Ukraine’s International Reserves
In July, Ukraine’s economy faced a historic record in its external payment balance, signaling significant financial sector challenges.
The current account deficit soared to $4.1 billion, reflecting an unstoppable outflow of currency resources outside the country.
This increase of 31% compared to June and 62% over July of the previous year raises concerns about the stability of the hryvnia and the country’s external financial system.
These figures were announced by the National Bank of Ukraine.The reasons behind this crisis stem from a trade imbalance, with imports exceeding exports, leading to a decline in foreign exchange reserves.
Additionally, capital outflow and mounting external debt compound the problem.
The trade deficit itself totaled approximately $5 billion—almost matching a record high—in part financed by international aid, but the rest was covered by the NBU’s reserves, which shrank by $2 billion.Trade in goods reported a slight decrease, with exports dropping by 1.1% year-over-year to approximately $1.7 billion in July.
Conversely, imports surged nearly 20%, driven mainly by machinery manufacturing (+50.8%), including military equipment and electric vehicles, as well as agro-industrial products (+25.7%).
This indicates deterioration in external trade balance and increased pressure on the national budget.Meanwhile, the trade in services showed some improvement: the deficit narrowed to $558 million in July from $684 million in June, primarily due to higher IT exports and reduced imports of financial services.
Primary income flows, such as dividends, remittances, and interest payments, increased to $168 million, while secondary income decreased sharply to $1.1 billion, prompting concerns among economic analysts.This situation threatens the long-term stability of Ukraine’s economy and calls for urgent government and NBU measures to stabilize the financial system and prevent a full-scale economic crisis.