Ukraine industrial output drops 4% in January

Ukraine’s industrial output dropped 4.0% yoy in
January after increasing 4.8% yoy in December, the State Statistics Service
reported Feb. 25. The seasonally adjusted output declined 3.3% m/m in January.

Manufacturing output dropped 6.5% yoy in January
(after a 1.8% yoy increase in December). In particular, the output in
metallurgy dropped 3.9% yoy (after 4.3% yoy growth in December), the decline in
machinery accelerated to 9.8% yoy (from 3.3% yoy in December) and in food
production accelerated to 8.4% yoy (after a 1.7% yoy slide in December). At the
same time, chemicals production jumped 10.0% yoy (after 3.6% yoy growth in
December) and pharmaceuticals production surged 21.4% yoy (after 25.1% yoy
growth in December).

Mining production declined 3.0% yoy after jumping 5.4%
yoy in the prior month. In particular, iron ore production slid 0.3% yoy after
surging 20.0% yoy in December. Coal production fell 4.5% yoy while oil and gas
production dropped 4.8% yoy.

The supply of electricity & natural gas increased
3.2% yoy, slowing from 15.8% yoy growth in December.

Regionally, the steepest declines in December were
observed in the Kirovohrad (-37.8% yoy), Kherson (-23.3% yoy) and Odesa (-19.1%
yoy) regions. Six out of 25 regions posted an increase of industrial output. It
grew the most in the Ukraine-controlled Luhansk region (+15.0% yoy), Vinnytsya
(+6.2% yoy), Ivano-Frankivsk and the Ukraine-controlled Donetsk regions (both
+5.4% yoy).

Evgeniya Akhtyrko: It’s very
disappointing to see the industry switching back to decline after its inspiring
growth observed in December. Notably, the comparative base of last year was low
(a 5.1% yoy decline in January 2020), so Ukraine’s industrial output is now at
its lows.

It looks like the factor of favorable price situation
and high demand at external markets for Ukraine’s iron ore and metals is not in
play anymore. Surprisingly, the fast growth of population’s real income and
retail sales don’t result in performance improvement of the food industry.

Should Ukraine’s industrial output have stayed this
low in February, our outlook for the industrial production 6.5% yoy growth in
2021 will be irrelevant. In 2020, Ukraine’s industrial output declined 5.2%
yoy.