Ukraine industrial drops 0.5% yoy in December, annual result in the red

Ukraine’s industrial output dropped 0.5% yoy in
December after November’s growth of 0.3% yoy, the State Statistics Service reported
on Jan. 23. The decline in utilities and mining offset the upsurge in
machinery, metallurgy, and chemicals. Utility production declined 13.3% yoy
(from 6.4% yoy in November) and mining dropped 4.4% yoy (from 2.8% yoy).
Machinery output grew 14.6% yoy (from 3.6% yoy in November), metallurgy
improved 3.4% yoy (from 2.7% yoy) and chemicals rose 41.0% yoy (from 46.1%
yoy).

Industrial output ended 2017 in the red at a 0.1% yoy
loss. Annual manufacturing growth of 4.0% yoy was set off by declining utilities
and mining, 6.5% yoy and 5.8% respectively.

Regionally, the deepest decline remained in the
Ukraine-controlled part of Luhansk (-44.0% yoy), followed by Khmelnytsk (-17.3%
yoy) and Ukrainian-controlled Donetsk (-16.2% yoy). Growth was strongest in the
western regions of Ternopil (29.9% yoy growth), Chernivtsi (15.3% yoy), and
Ivano-Frankivsk (12.0% yoy).

Evgeniya Akhtyrko: Output in
December remained depressed by slowing extraction of coal (-12.0% yoy) and iron
ore (-3.5% yoy), which continue to suffer from broken ties with occupied
Donbas. Machinery is booming on the back of high investment demand and state
orders. Metals are recovering slowly on the back of high export prices. As it
turns out, we were a bit optimistic in projecting industrial growth at 0.4% yoy
in 2017.

For 2018, we project strong industrial recovery of
4.6% yoy growth owing to strong export prices and a low comparative base. These
results will be apparent as soon as February when the negative effect of the
sharp fall in mining that had been observed since February 2017 will wear off.