Ukraine industrial output decline slows to 5% in July

The decline of Ukraine’s industrial output slowed to 4.8%
yoy in July from a 5.6% yoy drop in June, the State Statistics Service reported
on Aug 25. Seasonally adjusted output increased 1.4% m/m.
In 7M20, industrial output dropped 7.7% yoy.

Manufacturing output fell 6.6% yoy in July (after a
6.2% yoy decline in June). In particular, metallurgy output plummeted 10.6% yoy
(vs. a 3.9% yoy drop in June). Machinery production declined 21.3% yoy (after a
22.5% yoy fall in June).

Meanwhile, food production accelerated to 4.6% growth
yoy (from 0.8% yoy growth in June), chemical production surged 13.2% yoy (after
1.1% yoy growth in June).

Mining output fell 0.7% yoy in July, after declining
4.9% yoy June. In particular, iron ore production dropped 5.1% yoy, while coal
production increased 4.7% yoy, oil and gas production inched up 0.7% yoy. The
supply of electricity and natural gas decreased 0.7% yoy after a 4.0% yoy
decrease in June.

Regionally, the steepest declines were observed in
Ukraine-controlled Luhansk (-37.8% yoy), Ternopil (-22.4% yoy) and Odesa (-21.6%
yoy) regions. Industrial output grew the most in Chernivtsi (10.3% yoy),
Khmelnytsky (8.8% yoy) and Sumy (6.0% yoy) regions.

Evgeniya Akhtyrko: The decline
in industrial production continues to slow down. However, the decline in
metallurgy and manufacturing remains deep, and this significantly restrains the
recovery.

We improve our forecast of industrial output slightly
and expect it to drop 6% yoy in 2020 (vs. a previously forecasted decline of 7%
yoy).