Industrial output drops 1% yoy in December

Ukraine’s industrial output declined 1.0% yoy in
December after inching up 0.4% yoy in November, the State Statistics Service
reported on Jan. 31. Seasonally adjusted output declined 0.2% m/m in December.

In 2021, industrial output increased 1.0% yoy (vs. a
4.5% yoy decline in 2020).

Manufacturing output increased 0.9% yoy in December
(after a 1.8% yoy increase in November). In particular, machinery production
grew 8.0% yoy, food production advanced 3.3% yoy, and metals production added
1.3% yoy. At the same time, pharmaceutical output dropped 10.1% yoy and chemicals
production plummeted 18.8% yoy.

Mining sector production slid 0.7% yoy in December
(vs. 0.9% yoy growth November). In particular, iron ore output declined 4.9%
yoy. Meanwhile, coal production advanced 6.1% yoy,  and oil and gas
processing increased 1.6% yoy.

The supply of electricity and natural gas declined
8.3% yoy (vs. a 6.4% yoy decline in November).

Regionally, output declined in ten out of 25 regions.
It declined the most in Ukraine-controlled Luhansk (-24.0% yoy), Kyiv (-15.0%
yoy) and Ukraine-controlled Donetsk (-8.9% yoy) regions. The highest industrial
growth in December was in Rivne (15.8% yoy), Volyn (12.9% yoy) and Zhytomyr
(10.7% yoy) regions.

Evgeniya Akhtyrko: In
December, Ukraine ultimately lost the essential growth drivers, as the boom for
Ukraine’s iron ore and metals at the external markets is over. Month-to-month
fluctuations in such sectors as pharmaceuticals, chemicals and food industry
imply that the supply-demand balances are not restored.

We expect Ukraine’s industrial output to increase
3% yoy in 2022. It will take around two years for Ukraine’s industry to reach
the pre-pandemic level of output.