Ukraine industrial output falls 7.7% in March

The deceleration of Ukraine’s industrial output was
reinforced in March to a 7.7% yoy drop from 1.5% yoy in February, the State Statistics
Service reported on Apr. 24. Seasonally adjusted output decreased 1.3% m/m. In
1Q20, industrial output dropped 5.1% yoy.

Manufacturing output plummeted 8.5% yoy in March
(after a 0.4% yoy decline in February). In particular, metallurgy output dropped
15.8% yoy (vs. a 4.3% yoy decline in February). Machinery production fell 16.8%
yoy (after a 13.2% yoy decrease in February). Food production slid 1.3% yoy
(vs. 6.6% yoy growth in February). Meanwhile, pharmaceutical industry surged
21.8% yoy (vs. a 0.3% yoy decline in February), and chemical production inched
up 2.3% yoy  (after a 22.5% yoy advance in February).

Mining output fell 4.3% yoy in March, after declining
4.1% yoy February.  In particular, coal production plunged 19.0% yoy, oil
and natural gas production slid 3.7% yoy, and iron ore output dropped 3.0% yoy.
The supply of electricity and natural gas declined 10.0% yoy in March after an
11.8% yoy drop in February.

Regionally, the steepest declines were observed in the
Ukraine-controlled Luhansk (-31.3% yoy), Chernivtsi (-20.2% yoy) and
Zakarpattia (-19.3% yoy) regions. Growth was strongest in the Kirovohrad (8.3%
yoy), Lviv (6.0% yoy) and Kherson (3.6% yoy) regions.

Evgeniya Akhtyrko: As we expected, the severe lockdown measures introduced by the government
in the second half of March reinforced falling industrial output. Practically all
enterprises encountered some logistical difficulties related to the
transportation of employees and the disruption of some supply chains. Producers
also had difficulties in assessing effective production given the uncertainty
related to both domestic and external demand.

We are likely to see even deeper industrial decline in
April, as this month will fully absorb all the negatives related to the
quarantine restrictions. The situation in the following months will largely
depend on how quickly the Ukrainian government will be ready to remove
quarantine restrictions as the rate of coronavirus infections continues to
decline.