OREANDA-NEWS. The National Bank of Ukraine (NBU) reported preliminary data on the current account deficit in 9M07, which indicates both solid investment and portfolio capital inflows. The merchandise trade deficit of $5.5 bln was partly offset by a services trade surplus of $1.7 bln, which was nonetheless almost $1 bln lower than the same period one year ago. In the meantime, huge debt capital inflows of $11.3 bln diminished the negative gap in the current account and allowed the NBU to increase its reserves to an all-time high of $30.5 bln. An estimated $6.8 bln of foreign direct investment also contributed to the rise in NBU reserves.

The most unexpected feature of the balance of payments is declining surplus in the services trade balance, which is 70% dominated by pipeline transportation. The merchandise trade deficit is set to be around $8 bln by YE2007, while debt capital inflows, more than 80% of which are due to bank borrowings from abroad, will definitely subside in the fourth quarter. Based on these data, Alfa Capital Ukraine revises its forecast for the current account deficit from 1.7% to 3% of GDP, which translates into almost $4 bln in nominal terms.