Ukraine industry drops 0.7% in 1Q17

Ukraine’s March industrial output fell 2.7% yoy compared to an 1.7% yoy drop in the prior month, the State Statistics Service reported on April 21. The March decline was 2.9% yoy when adjusted for calendar days. Output was pulled down by utilities (-13.8% yoy vs. +1.8% yoy in February), mining (-8.9% yoy vs. -11.5% yoy), chemicals (-7.5% yoy vs. -0.8% yoy) and metals (-2.2% yoy vs. -4.3% yoy). Machinery output improved to 2.2% yoy growth from -1.4% yoy in the prior month.

On a regional basis, the Luhansk (-49.0% yoy) and Donetsk regions (-21.8% yoy) led the decline in March.

In 1Q17, Ukraine’s industry fell 0.7% yoy.

Alexander Paraschiy: The March industrial decline was stronger than we expected. To a large extent, it was due to warmer temperatures as heating production plummeted 36.3% yoy in March. However, a sudden drop in chemical production, as well as a continued decline in mining and metal production, also contributed. 

We still believe metal production will gradually adopt new supply chains after the government imposed its trade blockade of occupied Donbas in March but the numbers show that it might take more time than expected. So far, we are keeping Ukraine’s industrial output growth forecast at 1.4% yoy in 2017.