Ukraine industrial output falls 1.7% yoy in August

Ukraine’s industrial output fell 1.7% yoy in August after
dropping 0.2% yoy in July, the State Statistics Service reported on Sept. 23.
Seasonally adjusted output declined 0.5% m/m. In 8M19, industrial output inched
up 0.1% yoy.

Manufacturing output shrunk 4.1% yoy in August (after
0.3% yoy growth in July). In particular, food production dropped 3.2% yoy (vs.
a 4.4% yoy increase in July). Like in the previous month, metallurgy output
slid 3.2% yoy. The machinery decline deepened to 4.7% yoy (vs. a 0.1% yoy
decrease in July).

Mining output rose 2.7% yoy in August, speeding up
from 0.1% yoy growth in the previous month. In particular, iron ore production
surged 9.2% yoy. At the same time, coal output declined 5.5% yoy and oil and
natural gas production fell 0.8% yoy. Production of electricity and natural gas
improved 2.1% yoy in August (vs. a 3.6% yoy drop in July).

Regionally, the steepest declines were observed in the
Zakarpattia (-32.7% yoy), Khmelnitskiy (-19.1% yoy), and Chernihiv (-16.4% yoy)
regions. Growth was strongest in the Vinnytsia (24.7% yoy), Odesa (15.6% yoy)
and Kirovohrad (14.5% yoy) regions.

Evgeniya Akhtyrko: Ukrainian
industry is failing to show any signs of improvement. Surprisingly, the food
industry is not able to demonstrate consistent growth despite swelling harvests
for the second year in a row. Meanwhile, output in the machinery and metallurgy
sectors continues to decline as domestic demand remains weak and the situation
at the external markets is cloudy.

With the deepened decline in August, industrial output
is not likely to show any noticeable growth in 2019. The weak industrial
performance will negatively affect overall economic growth, resulting in slower
GDP growth in 2H19. Recall, Ukraine’s real GDP growth accelerated to 4.6% yoy in 2Q19
from 2.5% yoy in 1Q19.