Ukraine industry growth slows to 2.2% yoy in June

Ukraine’s industrial output growth slowed to 2.2% yoy
in June (compared to 2.5% yoy in May) amid a continuing decline in mining and
slower growth in manufacturing and utilities, the State Statistics Service
reported on July 23. Seasonally adjusted output inched 0.2% m/m in June.

In 6M18, industrial output increased 2.5% yoy (vs.
2.6% yoy growth in 5M18).

Growth in machinery decelerated to 4.8% yoy in June
(from 7.0% in May), while chemicals decelerated to 30.3% yoy (37.4% yoy in
May). June manufacturing slowed to 2.8% yoy growth from 3.2% yoy in May. The
food industry grew 0.7% yoy (0.5% yoy in May). Meanwhile, output in metallurgy
jumped 3.3% yoy after a 1.2% yoy decline in May. Mining production declined
0.4% yoy (after a 1.9% yoy decline in May) due to a 0.4% yoy decline in oil and
gas production. The growth of utilities slowed to 4.8% yoy (from 8.6% yoy in
May).

Regionally, growth was strongest in Ivano-Frankivsk
(11.7% yoy), Volyn (10.7% yoy) and Ukraine-controlled Donetsk (7.4% yoy)
regions. Declines were steepest in Rivne (-15.7% yoy), Odesa (-14.3% yoy) and
Kirovohrad (-5.8% yoy) regions.

Evgeniya Akhtyrko: The fall in
mining and weak food industry growth are lagging the overall industry result.
So far, it looks like even a good harvest will not boost the food industry
enough to improve industrial performance significantly in 2H18. That said, our
forecast of industrial growth of 4.6% yoy in 2018 is a subject for downward
revision.