Ukraine faces $800M export hit as EU trade perks expire

Ukraine’s export losses are set to reach $800 million for the period June to December this year following the expected end of free access to the European Union market, informed a central bank deputy governor on Thursday.

Preferential trade with the EU, a major trading partner for Ukraine, expires on June 5. The EU temporarily waived duties and quotas on Ukrainian exports after Russia’s full-scale invasion in February 2022.

Agricultural goods accounted for about 60% of Ukraine’s total exports of $41.6 billion last year, with the European Union buying around 60% of those goods, worth about $15 billion.

Serhiy Nikolaichuk, deputy central bank governor, said Ukraine and the European Union would return to a regime that was agreed as part of the free trade agreement. It envisages about 30 quotas for Ukrainian products, he said.

Exports of wheat, sugar and poultry would be the most affected, analysts said.

Ukraine’s economy ministry said in a statement that the EU extended the preferential trade regime for Ukrainian steel and iron products, supporting the sector that was severely hit by the war.

Nikolaichuk hoped that some Ukrainian agricultural producers would be able to continue exports of selected products above the quotas.

Despite the war with Russia, Ukraine was able to restore logistics and trade routes via the Black Sea, returning to markets in Africa and Asia, Nikolaichuk said, adding that these markets would help offset some EU market losses.

“Taking everything into account … net export losses … during June-December of this year will amount to about $800 million,” he said.

These losses would not be critical for the foreign exchange market, Nikolaichuk said, adding that the central bank would be able to compensate for that with appropriate policy measures.

The central bank intervenes regularly on the foreign exchange market to meet demand for hard currency and smooth out fluctuations in the currency exchange rate.

Ukraine’s trade deficit widened to $8.5 billion in the first quarter of the year compared with a deficit of about $5.4 billion in the same quarter of 2024, statistics showed.

The current account deficit was $6.8 billion in January to April, compared with $5.3 billion in the same period a year ago, central bank data showed.

Tags: European Union, wheat, quotas, Market, losses, demand, Ukraine, export, sugar, Poultry