Ukraine industry inches up 0.3% in November

Ukraine’s industrial output inched up 0.3% yoy in November,
slightly slowing from 0.4% yoy growth in the prior month, the State Statistics
Service reported on Dec. 21. Chemicals were in the lead (46.1% yoy growth vs.
38.9% yoy in October), followed by machinery (3.6% yoy growth from 3.8% yoy in
October) and metals (2.7% yoy growth from 3.3% yoy in October). Declining rates
slowed in utilities (-6.4% yoy drop from -7.6% yoy in October) and mining
(-2.8% yoy drop from -8.1% yoy in October).

In 11M17, industrial output was still negative at
-0.1% yoy.

Regionally, the deepest decline remained in the
Ukraine-controlled part of Luhansk region (-41.0% yoy), followed by Mykolayiv
(-11.1% yoy) and Ukrainian-controlled Donetsk region (-10.3% yoy). Western
regions performed strongly, led by Ternopil (23.0% yoy growth), Rivne (14.4%
yoy), and Ivano-Frankivsk (14.2% yoy).

Alexander Paraschiy: No
surprises in November. Extraction of coal fell 14.3% yoy, and iron ore fell
9.2% yoy, owing to the Ukrainian government’s broken ties with occupied Donbas.
Metals are recovering on the back of high export prices, but slower than
expected. Machinery is benefitting from state orders on cargo railcar
production, which surged almost 400% yoy through the month. By the year end, we
expect industrial growth will be slightly positive at 0.4% yoy growth in 2017.

For 2018, we project strong industrial recovery of
4.6% yoy growth owing to strong export prices and a low comparative base.
Mining started falling sharply already in February 2017, so we will see
improved industrial statistics starting February 2018.