Ukraine industry plunges 2.6% yoy in July
23 August 2017
Ukraine’s industrial output plunged 2.6% yoy in July
after two consecutive months of growth (3.8% yoy in June and 1.2% yoy in May),
the State Statistics Service reported on Aug 22. All core sectors worsened
except for chemicals, which improved 26.7% yoy (compared to 1.0% yoy in June).
Machinery output slowed to 9.1% yoy growth (15.9% yoy in June), utilities
plunged 11.9% yoy (-9.6% yoy in June), metals declined 4.9% yoy (-1.8% yoy) and
mining fell 9.4% (-0.7% yoy), including a 7.7% yoy drop in iron ore
extraction.
Regionally, the declines were led by Luhansk (-20.0%
yoy), Donetsk (-19.3% yoy) and Kyiv city (-7.4% yoy). The strongest regions
were Kyiv region (58.5% yoy growth), Kirovohrad (19.7% yoy) and Ivano-Frankivsk
(13.8% yoy).
In 7M17, industry decreased 0.7% yoy.
Alexander Paraschiy: The
industrial output numbers keep surprising. Volatility is normal for an
economy experiencing structural changes, like broken trade relations with
occupied Donbas, and the poor statistics for the steel and coal sectors (which
lost some assets on the occupied territory) is logical. However, it’s very
strange to see declining iron ore extraction amid soaring exports prices at the
global markets.
the coming months amid robust global prices for Ukraine’s key exports, steel
and iron ore. However, July drop in production put under risk our industrial
growth projection for 2017 (+1.4% yoy). Fulfilling it will require 4.3% yoy
average monthly industrial growth between August and the year end. Given the
pattern of extreme volatility this year, we are not rushing to revise our
initial estimate. However, we recognize the higher risk for a downward forecast
revision.
