Ukraine industrial output drops 0.9% yoy in November

Ukraine’s industrial output declined 0.9% yoy in
November after a 1.4% growth in October due to reduced manufacturing output,
the State Statistics Service reported on Dec. 21. Seasonally adjusted output decreased
0.5% m/m. In 11M18, industrial output increased 1.6% yoy (vs. 1.8% yoy in
10M18).

Mining output rose 1.1% yoy in November (after rising
5.9% yoy in October) due to continuing growth of coal (1.1% yoy) and ore (4.0%
yoy) production. Meanwhile, coal output declined 1.1% yoy (after a 14.2% yoy
surge in October).

October manufacturing output dropped 2.5% yoy (after a
1.0% yoy increase in October), mostly due to a reinforced decline in metallurgy
(-5.3% yoy), machinery (-4.0% yoy) and chemicals (-26.4% yoy). Utilities output
rose 2.8% yoy (after a 2.6% yoy drop in October).

Regionally, growth was strongest in the Chernivtsi
(12.1% yoy), Vinnytsia (9.7% yoy) and Rivne (9.7% yoy) regions. Declines were
steepest in the Ukraine-controlled Luhansk (-35%% yoy), Odesa  (-25.4%
yoy) and Khmelnytskiy regions (-8.6% yoy).

Evgeniya Akhtyrko: Industrial
performance deteriorated amid unexpected failure in chemical production and an
expected continued decline in machinery and metallurgy. Despite the improved performance
of agriculture (boosted by a record-high grain crop), the domestic food
production industry is still failing to halt its negative trend.

We project Ukraine’s industrial output to increase
around 1.6% yoy in 2018. This is a very weak result given the absence of major
destabilizing factors affecting the industry (like the loss of control on
territories or trade blockade with occupied Donbass in the previous years).
With its unreformed and obsolete structure, the Ukrainian economy is not likely
to make any breakthrough and demonstrate consistent growth in the mid-term.