Ukraine industry growth accelerates to 2.9% yoy in July

Ukraine’s industrial output growth accelerated to 2.9%
yoy in July (compared to 2.2% yoy in June) amid restored growth in mining, the
State Statistics Service reported on Aug. 23. Seasonally adjusted output
declined 1.3% m/m in July.

In 7M18, industrial output increased 2.6% yoy (vs.
2.5% yoy growth in 6M18).

Mining output rose 4.9% yoy in July (from a 0.6% yoy
decline in June) due to a surge in iron ore production (8.1% yoy) and restored
growth in oil and gas production (5.7% yoy). Meanwhile, coal production dropped
1.8% yoy (from 0.6% yoy growth in June).

July manufacturing output slowed to 2.3% yoy growth
(from a 2.8% yoy rise in June). In particular, food production declined 1.9%
yoy (from 0.7% yoy growth in June). Growth in machinery slowed to 1.0% yoy in
July (4.8% in June), while chemicals decelerated to 9.5% yoy (from 30.3% yoy in
June). Meanwhile, output in metallurgy accelerated to 5.6% yoy growth (from
3.3% yoy in June).

Utilities growth slowed to 3.2% yoy (from 4.8% yoy in
June).

Regionally, growth was strongest in the Sumy (20.4%
yoy), Mykolayiv (15.3% yoy) and Volyn (11.7% yoy) regions. Declines were
steepest in the Kyiv (-23.8% yoy), Rivne (-16.1% yoy) and Kherson (-9.8% yoy)
regions.

Evgeniya Akhtyrko: July’s
mining improvement was mostly due to the effect of a lower comparative base.
Meanwhile, the month-to-month decline in industrial output in seasonally
adjusted terms points to no overall improvement in industry. In particular, the
food industry failed to demonstrate consistent advancement despite growing
consumer demand. The significant slowdown in machinery and chemicals might
indicate that the low-base effect is wearing off.

In light of this, we are not likely to see any
essential boost in industrial growth through the year end and we will likely
revise our 2018 forecast of 4.6% yoy.