Ukraine industrial output decline slows to 12% in May

The decline of Ukraine’s industrial output slowed to
12.2% yoy in May from a 16.2% yoy plunge in April, the State Statistics Service
reported on June 23. Seasonally adjusted output increased 2.8% m/m. In 5M20,
industrial output dropped 8.7% yoy.

Manufacturing output fell 15.6% yoy in May (after a
20.3% yoy plunge in April). In particular, metallurgy output dropped 19.0% yoy
(vs. a 29.1% yoy decline in April). Machinery production plummeted 22.4% yoy
(after a 35.6% yoy fall in April). Food production slid 5.4% yoy (vs. a 6.5%
yoy decrease in April). Chemical production dropped 5.6% yoy (after a 6.5% yoy
growth in April). Meanwhile, pharmaceutical production advanced 8.8% yoy (after
a 17.1% yoy surge in April).

Mining output fell 8.9% yoy in May, after sliding
11.2% yoy April. In particular, coal production plunged 44.5% yoy, oil and natural
gas production slid 3.2% yoy, and iron ore output dropped 4.3% yoy. The supply
of electricity and natural gas decreased 1.9% yoy after a 7.2% yoy drop in
April.

Regionally, the steepest declines were observed in the
Chernivtsi (-40.9% yoy), Zakarpattia (-34.3% yoy) and Volyn (-26.0% yoy)
regions. Industrial output grew only in Ukraine-controlled Luhansk region
(50.8% yoy).

Evgeniya Akhtyrko: It looks
like the biggest hit from the pandemic is in the past for Ukraine’s industry,
and any further decline is likely to slow through the end of the year. We don’t
expect to see year-on-year growth in any month of this year given the high
dependence of Ukraine’s industry on external demand, which is also likely to be
sluggish through the year end.

We expect Ukraine’s industrial output will drop 7% yoy
in 2020 (vs. a 0.5% yoy decline in 2019).