Ukraine industrial output decline slows to 6% in June

The decline of Ukraine’s industrial output slowed to
5.6% yoy in June from a 12.2% yoy plunge in May, the State Statistics Service reported
on July 22. Seasonally adjusted output increased 3.4% m/m. In 1H20, industrial
output dropped 8.3% yoy.

Manufacturing output fell 6.2% yoy in June (after a
15.6% yoy plunge in May). In particular, metallurgy output slid 3.9% yoy (vs. a
19.0% yoy drop in May). Machinery production plummeted 22.5% yoy (after a 22.4%
yoy fall in May).

Meanwhile, food production inched up 0.8% yoy (vs. a
5.4% yoy decrease in May), chemical production advanced 1.1% yoy (after 5.6%
yoy growth in May), coke and oil production gained 7.7% yoy (vs. a 0.8% yoy
drop in May).

Mining output fell 4.9% yoy in June, after plummeting
8.9% yoy May. In particular, coal production plunged 22.7% yoy, oil and natural
gas production slid 2.5% yoy, and iron ore output dropped 4.8% yoy. The supply
of electricity and natural gas decreased 4.0% yoy after a 1.9% yoy decrease in
May.

Regionally, the steepest declines were observed in
Ukraine-controlled Luhansk (-52.8% yoy), Dnipropetrovsk (-12.9% yoy) and
Vinnytsia (-12.4% yoy) regions. Industrial output grew the most in Kirovohrad
(11.3% yoy), Khmelnytsky (10.9% yoy) and Sumy (8.9% yoy).

Evgeniya Akhtyrko: The June
results met our expectations. However, we
don’t see much chances for Ukrainian industry to show year-on-year growth in
any month of this year, given the high dependence of Ukraine’s industry on
external demand, which is also likely to be sluggish through the year end.

We expect Ukraine’s industrial output will drop
around 7% yoy in 2020 (vs. a 0.5% yoy decline in 2019).