Ukraine industrial output increases 0.2% in July

Ukraine’s industrial output increased 0.2% yoy in
July, slowing from 1.1% yoy growth in June, the State Statistics Service reported
on Aug. 25. Seasonally adjusted output increased 1.3% m/m in July.

In 7M21, industrial output increased 1.8% yoy (vs. a
6.9% yoy decline in 7M20).

Manufacturing output declined 1.8% yoy in July (after
a 2.0% yoy increase in June). The decline was mostly due to a 19.2% yoy fall in
the food industry (vs. a 16.3% yoy decline in June) and a drop in chemicals
production of 5.8% yoy (vs. a 7.7% yoy decline in June). At the same time,
metallurgical output increased 8.4% yoy (vs. 7.0% yoy growth in June),
machinery output advanced 3.8% yoy (vs. a 17.6% yoy increase in June).

Mining sector production advanced 4.0% yoy in July
(vs. 2.5% yoy growth in June). In particular, iron ore production surged 13.3%
yoy (vs. a 4.2% yoy increase in June). Meanwhile, coal production dropped 8.1%
yoy (vs. 3.5% yoy growth in June), oil and gas production declined 2.1% yoy
(vs. a 1.3% yoy decline in June).

The supply of electricity and natural gas advanced
2.2% yoy (vs. a 6.5% yoy decline in June).

Regionally, the highest industrial growth in July was
in Ukraine-controlled Luhansk and Donetsk (59.36% yoy and 10.3% yoy,
respectively) as well as Rivne (13.3% yoy). Output declined in 13 out of 25
regions. It dropped the most in Kirovohrad (-29.3% yoy), Chernivtsi (-22.5%
yoy) and Khmelnytskyi (-12.6% yoy), regions.

Evgeniya Akhtyrko:  July’s fallout in food production might be partially related to
a big year-on-year decline of agricultural production in June (-16.0% yoy). The
situation will improve in the upcoming months, as the agricultural sector gets
rid of bumpy statistical results caused by the skewed seasonality of the
previous year. Anyway, we don’t expect Ukraine’s industry to be anywhere close
to rebounding from the fallout of 2020 (-4.5% yoy). We expect Ukraine’s
industrial growth to be around 2% in 2021.