Ukraine industrial output falls 5.1% in January

Ukraine’s industrial output fell 5.1% yoy in January
after sliding 7.7% yoy in December, the State Statistics Service reported on
Feb. 26. Seasonally adjusted output inched up 1.2% m/m.

Manufacturing output shrank 3.2% yoy in January (after
a 5.4% yoy decline in December). In particular, machinery production dropped
10.5% yoy (after a 14.5% yoy decline in December). Metallurgy output dropped
10.3% yoy (vs. a 10.0% yoy decline in December). Meanwhile, food production
increased 2.9% yoy (vs. a 2.4% yoy decline in December) and the chemical
industry surged 24.4% yoy (after an 8.7% yoy increase in December).

Mining output fell 4.5% yoy in January, after plummeting
8.5% yoy December. In particular, coal production dropped 19.2% yoy, oil and
natural gas production slid 3.0% yoy, and iron ore output fell 1.5% yoy. The
supply of electricity and natural gas slid 11.8% yoy in January after a 15.7%
yoy drop in December.

Regionally, the steepest declines were observed in
Zakarpattia (-30.7% yoy), Kharkiv and Ukraine-controlled Luhansk (-15.0% yoy)
regions. Growth was strongest in Odesa (12.3% yoy), Mykolayiv (9.6% yoy) and
Rivne (3.5% yoy) regions.

Evgeniya Akhtyrko: The decline
in Ukraine’s industry slowed down in January. The renewed growth in food
production and accelerated growth in chemical industry were not enough to stop
the decline in manufacturing where the drop in metallurgy and machinery
remained almost as strong as in December. The decline in coal mining and supply
of electricity and natural gas is fostered by abnormally warm weather in
Ukraine.

The decline in Ukraine’s industry is likely the
extend through most of the first half of the year as we do not see the factors
which would prompt a faster recovery. We expect Ukraine’s industrial output to
increase 1% yoy in 2020 (vs. a 1.8% yoy decline in 2019).