Ukraine industrial output declines 1.8% yoy in February

Ukraine’s industrial output declined 1.8% yoy in
February, after a 3.3% yoy fall in January, due to a continuing slide in
manufacturing and a production drop in electricity and natural gas supply, the
State Statistics Service reported on March 22. Seasonally adjusted output
decreased 0.6% m/m. In 2M19, industrial output declined 2.5% yoy.

Manufacturing output fell 1.5% yoy in February (after
a 5.5% yoy drop in January). In particular, chemical output plunged 19.5% yoy,
machinery declined 4.3% yoy, and metallurgy dropped 3.7% yoy. Meanwhile, output
in food production inched up 0.6% yoy and pharmaceutical output surged 23.1%
yoy.

Mining output increased 1.6% yoy in February (after
declining 1.6% yoy in January). In particular, coal production jumped 9.0% yoy,
oil and natural gas output increased 5.6% yoy, and iron ore production inched
up 0.2% yoy. The supply of electricity and natural gas declined 4.9% yoy in
February.

Regionally, growth was strongest in the Rivne (12.1%
yoy), Zakarpattia (9.1% yoy) and Ternopil (8.5% yoy) regions. Declines were
steepest in the Khmelnytskiy (-19.8% yoy), Lviv (-11.6% yoy) and Sumy (-11.1%
yoy) regions.

Evgeniya Akhtyrko: The decline
in industrial production slowed down in February as mining growth was restored,
but production results in this sector have been highly inconsistent recently.
The long-lasting downward trend in food production finally halted in February.
We expect industrial output to be flat year-on-year in March if February’s
overall trends continue.

We expect Ukraine’s industrial output to increase
2.0% yoy in 2019 (vs. 1.1% yoy in 2018).