Ukraine industrial output drops 5% in February

Ukraine’s industrial output dropped 4.6% yoy in February,
accelerating from a 4.0% yoy decline in January, the State Statistics Service
reported on March 23. The seasonally adjusted output inched up 0.4% m/m in
February. In 2M21, industrial output declined 4.2% yoy.

Manufacturing output dropped 6.7% yoy in February
(after a 6.5% yoy decline in January). In particular, the decline in food
production accelerated to 13.1% yoy (from a 8.4% yoy decline in January).
Output in metallurgy dropped 3.5% yoy (after a 3.9% yoy decline in January),
the output in machinery declined to 7.0% yoy (after dropping 9.8% yoy in
January). At the same time, the growth in chemicals production accelerated to
13.5% yoy (after 10.0% yoy growth in January), pharmaceuticals production
inched up 0.4% yoy (after 21.4% yoy growth in January).

The decline in mining accelerated to 3.9% yoy (from a
3.0% yoy decline in January). In particular, coal production fell 6.8% yoy
while oil and gas production dropped 7.9% yoy. At the same time, iron ore
production advanced 1.3% yoy.

The supply of electricity & natural gas increased
1.9% yoy, slowing from 3.2% yoy growth in January.

Regionally, the steepest declines in February were
observed in Kirovohrad (-24.1% yoy), Mykolayiv (-17.7% yoy) and Kherson (-17.1%
yoy). Eight out of 25 regions posted an increase of industrial output. It grew
the most in Ukraine-controlled Luhansk region (+11.5% yoy), Volyn (+4.9% yoy)
and the Ukraine-controlled Donetsk region (+3.9% yoy).

Evgeniya Akhtyrko: It’s
another discouraging set of statistics showing that Ukraine’s economy is hardly
demonstrating any noticeable recovery. There was no improvement in major
industrial sectors in February, and the industrial output is at its lows.

The significant drop in food production is likely to
be the aftermath of contracted agricultural supply because of lowered
agricultural production in 2020.

The significant decline of industrial output in
2M21 makes our outlook for the industrial production 6.5% yoy growth in 2021
unattainable. Now, the industrial output growth of around 4% yoy looks like
more realistic expectation for 2021.