Ukraine industrial output falls 5% yoy in October

Ukraine’s industrial output fell 5.0% yoy in October
after dropping 1.1% yoy in September, the State Statistics Service reported on
Nov. 22. Seasonally adjusted output declined 2.4% m/m. In 10M19, industrial
output declined 0.6% yoy.

Manufacturing output shrunk 6.0% yoy in October (after
a 1.2% yoy decline in September). In particular, metallurgy output plummeted
19.9% yoy (from a 5.4% yoy slide in September). Machinery production shrank
5.8% yoy (vs. a 3.6% yoy decline in September). Meanwhile, food production fell
4.3% yoy (vs. a 1.6% yoy increase in September).

Mining output declined 3.6% yoy in October, deepening
from a 2.2% yoy decline in September. In particular, coal production declined
2.3% yoy, oil and natural gas production slid 2.0% yoy, and iron ore output
fell 4.0% yoy. Output in supply of electricity and natural gas slid 4.4% yoy in
October (vs. 1.0% yoy growth in September).

Regionally, the steepest declines were observed in the
Zakarpattia (-25.8% yoy), Chernihiv (-21.3% yoy) and Khmelnytskiy (-20.0% yoy)
regions. Growth was strongest in the Odesa (12.7% yoy), Zhytomyr (8.9% yoy) and
Vinnytsya (8.6% yoy) regions.

Evgeniya Akhtyrko: The
situation in Ukraine’s industry is devastating. The unfavorable situation on
the global market is slaying Ukraine’s metallurgical sector. Surprisingly, the
food industry is unable to demonstrate a positive trend despite a plentiful raw
commodity supply, ensured by a record-high harvest for two years in a row.

It looks like the decline in Ukraine’s industry
will deepen in 4Q19. We are downgrading our forecast on industrial output,
expecting a 1% yoy contraction in 2019 instead of the previously expected zero
growth. Recall, Ukraine’s industry increased 1.6% yoy in 2018.