Ukraine industrial growth speeds up to 3.8% yoy in June

Ukraine industrial growth speeds up to 3.8% yoy in June

Ukraine industrial growth speeds up to 3.8% yoy in June

Ukraine’s industrial output sped up to 3.8% yoy growth in June from 1.2% yoy in the prior month, the State Statistics Service reported on July 21. All core sectors improved except for utilities, which fell 9.6% yoy and were flat from May. Machinery sped up to 15.7% yoy growth from 14.7% yoy in May. Metals output turned positive at 1.8% yoy growth after four months of decline. Chemical production also grew (1.0% yoy growth) for the first time since September, or eight months in the red. Mining inched up 0.7% yoy with coal extraction (7.2% yoy growth) leading this growth.

 By geography, the strongest decline was in the Cherkasy region, central Ukraine (-8.4% yoy) and in Kyiv (-4.2% yoy) in June. The strongest growth was in Odesa region (43.9% yoy growth) and the Rivne region in western Ukraine (28.4% yoy). The war-torn Donetsk and Luhansk regions still are in the red (-4.3% yoy and -2.0% yoy, respectively), but this decline is very modest compared to the double-digit contraction over the last four months.

 In 1H17, industry was still in the red at a 0.4% yoy decline.

 Alexander Paraschiy: Industry has finally begun to overcome the adverse impact of broken relations with occupied Donbas. At the same time, the exceptionally good results in coal mining should not be exaggerated as they were prompted by a low comparative base. In June 2016, Ukraine experienced a short-term trade blockade with occupied Donbas, initiated by the occupiers.

 Certainly, there’s still some volatility and stagnant sectors. However, it looks as though Ukrainian industry has finally turned the corner and that from this point forward, output will be in the black, perhaps except for coal mining. In fact, industrial growth is in line with our 2H17 expectation for 3-4% average monthly growth, which means our projection of 1.4% yoy industry growth for the year is on track.


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