Ukrainian industry plummets 22.5% in February

Ukraine’s industrial output plummeted 22.5% yoy in February, deepening the 21.3% yoy drop of the prior month, Ukrstat reported on March 18. Leading the declines were mining, which plunged 29.0% yoy, compared to a 24.1% yoy drop in January; metal production, which fell 27.6% yoy, compared to a 18.9% yoy drop in January; chemicals, which slid 24.2% yoy compared to a 21.6% yoy drop in January; and utilities, which contracted 18.9% yoy, compared to a 17.2% yoy drop in January.

Only machinery among Ukraine’s core industries somewhat slowed its decline to 21.7% yoy from a 32.5% yoy plunge in January. Industry performance in war-torn Donbas worsened even further as industrial output in the Luhansk region plummeted 89% yoy, compared to a 87.0% yoy fall in January, and output in the Donetsk oblast slid 59.4% yoy, compared to a 49.9% yoy drop in January, according to UkrStat.

Alexander Paraschiy: We believe the industrial production declines are bottoming out, barring an escalation in the Donbas warfare. For example, an attack on the industrial center of Mariupol, the strategic port city near the front lines, could push the economy to new lows. However, under the current situation, we can expect industry to improve gradually starting in August, at least due to the statistical effect. Assuming the frontline in the east doesn’t shift, we expect the drop in industrial output to be limited to 14.6% yoy in 2015.