Ukraine industrial output jumps 5% in December

Ukraine’s industrial output jumped 4.8% yoy in December
after declining 0.3% yoy in November, the State Statistics Service reported on
Jan. 22. Seasonally adjusted output increased 1.1% m/m in December. In 2020,
industrial output dropped 5.2% yoy.

Manufacturing output climbed 1.8% yoy in December (after
a 3.4% yoy decline in November). In particular, the output in metallurgy
improved 4.3% yoy (after 8.3% yoy growth in November), chemical production
advanced 3.6% yoy (vs. 13.4% yoy decline in November), and pharmaceutical
production surged 25.1% yoy (vs. 0.6% yoy decline in November). At the same
time, the output in machinery declined 3.3% yoy (vs. a 15.3% yoy plunge in
November), while food production slid 1.7% yoy (5.4% yoy in November).

The growth in mining accelerated to 5.4% yoy from 1.8%
yoy in the prior month driven by a surge in iron ore production of 20.0% yoy.
At the same time, coal production fell 2.3% yoy and oil & gas production
dropped 4.5% yoy. The supply of electricity & natural gas accelerated to
15.8% yoy from 10.0% yoy growth in November. 

Regionally, the steepest growth in December was
observed in the Ukraine-controlled Donetsk (23.7% yoy), Odesa (22.2% yoy), and
Vinnytsia (18.9% yoy) regions. Seven out of 25 regions posted a decline in
industrial output. It dropped the most in Rivne (-28.6% yoy), Mykolayiv (-13.1%
yoy) and Ukraine-controlled Luhansk (-12.9% yoy).

Evgeniya Akhtyrko: The
increased demand and favorable price situation for iron ore and metals at the
external markets helped Ukraine’s industry to advance significantly in
December. In addition, the low comparative base of the previous year
contributed to the impressive result. Meanwhile, Ukraine’s other major
industrial sectors are still failing to show a consistent improvement, showing
large month-to-month swings.

The result of Ukraine’s industrial production in 2021
will largely depend on how long the favorable external conditions for iron ore
and metals producers last. Meanwhile, domestically oriented producers are not
likely to advance a lot, and any growth they experience will just be a bounce
after the recession of 2020. We expect Ukraine’s industrial output will advance
6.5% yoy in 2021.