Ukraine industry plunges 13.4% yoy in 2015

Ukraine’s industrial output plunged 13.4% yoy in 2015, UkrStat reported on Jan 21, as compared to the 10.1% yoy drop in 2014. All industries suffered declines in 2015, led by metallurgy (-16.4%), machinery (-14.6%) and mining (-14.5% yoy).

In December 2015, the decline in industrial output slowed to -2.1% yoy compared to -4.9% yoy in the prior month. The main factors were improved machinery (+5.8% yoy vs. +4.1% yoy in November) and mining (+2.7% yoy vs. -2.7% yoy) output, as well as a slowed decline in metal production (-1.9% yoy vs. -3.4% yoy). At the same time, utilities and chemicals worsened to -10.9% yoy (-8.1% yoy in November) and -8.5% yoy (-3.1% yoy), respectively.

Industrial output in 2015 in the partially occupied Donetsk and Luhansk regions contracted 34.7% yoy and 66.0% yoy, respectively. In December alone, industry in the Donetsk region fell 14.7% yoy while jumping 67.0% yoy in Luhansk.

Alexander Paraschiy: The 2015 result appeared to be a bit better than we expected (-13.8% yoy) on the relatively strong December data. Recent industry statistics are still in red, but the decline is slowing, which allows us to expect some minor recovery in industrial output (+0.7% yoy) in 2016. However, that positive performance is at risk amid sliding global prices for metals and iron ore and ongoing Russian aggression in the form of trade sanctions and cancelled free trade.

Improved mining and machinery output in December shouldn’t be seen as a sign of recovery, we believe. We attribute the yoy rise in both sectors to the effect of a low comparison base. In December 2014, a lot of the enterprises in these sectors suffered from cuts of electricity supply as Ukraine suffered from an electric capacity deficit due to depleted coal stockpiles at power plants.