Ukraine industrial output plummets 16% in April

The deceleration of Ukraine’s industrial output was
reinforced in April to a 16.2% yoy fall from -7.7% yoy in March, the State
Statistics Service reported on May 22. Seasonally adjusted output decreased
6.0% m/m. In 4M20, industrial output dropped 7.9% yoy.

Manufacturing output plummeted 20.3% yoy in April
(after an 8.5% yoy decline in March). In particular, metallurgy output dropped
29.1% yoy (vs. a 15.8% yoy decline in March). Machinery production fell 35.6%
yoy (after a 16.8% yoy decrease in March). Food production slid 6.5% yoy (vs. a
1.3% yoy decline in March). Meanwhile, the pharmaceutical industry surged 17.1%
yoy (vs. 21.8% yoy growth in March), and chemical production jumped 6.5%
yoy  (after a 2.3% yoy advance in March).

Mining output fell 11.2% yoy in April, after declining
4.3% yoy March.  In particular, coal production plunged 35.1% yoy, oil and
natural gas production slid 3.5% yoy, and iron ore output dropped 15.6% yoy.
The supply of electricity and natural gas declined 7.2% yoy in April after a
10.0% yoy drop in March.

Regionally, the steepest declines were observed in the
Chernivtsi (-54.5% yoy), Ternopil (-32.0% yoy) and Dnipropetrovsk (-31.0% yoy)
regions. Meanwhile, the Kirovohrad (3.2% yoy), Kherson (0.5% yoy) and Poltava
(0.5% yoy) managed to show growth.

Evgeniya Akhtyrko: As we expected,
the decline of industrial output accelerated significantly in April, as this
month fully absorbed all the negatives related to the quarantine restrictions.
Being important contributors to Ukraine’s industrial output, metallurgy and
machinery suffered the most as they are exposed to both domestic restrictions
and the drop in external demand. Meanwhile, the food, pharmaceutical and
chemical sectors – which are more oriented towards the domestic market – were
less affected, showing either a modest decline or even growth.

We are likely to see quite a significant decline of
industrial output in May as well, as the quarantine restrictions were in place
for most of the month. We project that the decline of Ukraine’s industry will
ease in 2H20. However, output will be greatly affected by both domestic and
external demand cooling. We expect Ukraine’s industrial output will decline 7%
yoy in 2020 (vs. a 0.5% yoy decline in 2019).