Ukraine industry plunges 21% in January

Ukraine’s industrial output plunged 21.3% yoy in January compared to a 17.9% yoy drop in the prior month, Ukrstat reported on Feb 18. Key industries continued to hemorrhage, led by machinery (a 32.5% yoy plunge compared to -24.8% yoy in December), chemicals (-21.6% yoy, -12.4% yoy in December), metals (-18.9% yoy, -16.1% yoy in December), and utilities (-17.2% yoy, -11.1% yoy in December). Mining sector declines slowed slightly in January to -24.1% yoy compared to -29.1% yoy in the prior month. Overall, declining production in the Luhansk (-87.0% yoy) and Donetsk regions (-49.9% yoy) were the main sources of industrial output decline.

Alexander Paraschiy: Industry contracted much stronger than we expected in January. We believed that the 2H14 plunge in industrial output had already bottomed out after Russia’s assault on Donbas, therefore we expected industrial production to fall nearly 16% yoy on an average monthly basis in 1H15. Now we see that aggravated problems in the Russian economy, as well as sliding resources prices, will pull industrial output even deeper (by more than 20% yoy in 1H15). Against this backdrop, we anticipate industry production falling 14.6% yoy in 2015 (compared to a 4.8% yoy drop we estimated previously).