Ukraine industrial output falls 1.8% yoy in 2019

Ukraine’s industrial output fell 7.7% yoy in December
after sliding 7.5% yoy in November, the State Statistics Service reported on
Jan. 22. Seasonally adjusted output declined 1.1% m/m. In 2019, industrial output
decreased 1.8% yoy (vs. 1.6% growth in 2018).

Manufacturing output shrank 5.4% yoy in December
(after a 6.4% yoy decline in November). In particular, the fall in machinery
production deepened to 14.5% yoy (from 12.7% yoy in November). Metallurgy output
dropped 10.0% yoy (vs. a 14.2% yoy plunge in November). In addition, food
production fell 3.4% yoy (vs. a 4.7% yoy decline in October).

Mining output decreased 8.5% yoy in December,
deepening from a 7.9% yoy drop in November. In particular, coal production
plunged 17.3% yoy, oil and natural gas production slid 1.9% yoy, and iron ore
output fell 9.4% yoy. Output in supply of electricity and natural gas fell
15.7% yoy in December, deepening from a 12.0% yoy drop in November.

Regionally, the steepest declines were observed in the
Zakarpattia (-30.7% yoy), Kharkiv and Ukraine-controlled Luhansk (-15.0% yoy)
regions. Growth was strongest in the Odesa (12.2% yoy), Rivne (3.5% yoy) and
Cherkasy (2.8% yoy) regions.

Evgeniya Akhtyrko: We expected
December’s industrial output drop would be similar to the prior month. The sad
state of Ukraine’s mining and manufacturing didn’t change noticeably in
December. Meanwhile, a decline in the supply of electricity and natural gas
deepened due to lower demand, which has been driven by abnormally warm weather.

We don’t expect any significant improvement in
industrial production in the nearest months as the situation for Ukraine’s
metallurgy and iron ore sectors at the external markets is likely to remain
unfavorable.