Ukraine industrial output 16% in October

Ukraine’s industrial output plunged 16.3% yoy in October, almost flat compared to the 16.6% yoy drop in the prior month, Ukrstat reported on Nov 18. Machinery worsened its performance to -26.1% yoy (from -22.8% yoy in September). Chemical production also deteriorated to -10.6% yoy vs. -6.2% yoy in the prior month.

At the same time, the declines slowed in mining (-24.9%, compared to -27.1% yoy in September), metals (-21.1% yoy, compared to -28.3% yoy in September), and utilities (-16.5% yoy, compared to -18.8% yoy in September). Industrial output decline also slowed in the partially occupied regions of Donetsk (-55% yoy, compared to -59% yoy in September) and Luhansk (-80% yoy, compared to -85% yoy in September).

Alexander Paraschiy: Due to the Donbas occupation, industrial output will be falling in the double-digits in the nearest future, at least on the back of a comparative base effect. In this context, we can even claim that a 16.3% yoy drop is not that bad compared to more than a 20% yoy slump experienced in August. Unless the Russians launch a new assault (as is widely being speculated) in the next several weeks, we expect output declines could slow to near 10% yoy for 2014 and perform slightly better than our forecast of -11.8% yoy.

In regards to 2015 prospects, we assume industrial output will be calculated net of occupied Donbas starting Jan. 1, which means that some industrial growth could be expected for the country. We estimate 1.1% yoy growth in 2015.