Page 12 - UKRRptNov21

raised its expectations for the growth of the Ukrainian economy in 2022 to 3.6%, while earlier this figure was expected at 3.4%. As indicated in the WEO, the estimate of the average annual inflation in Ukraine in 2021 was increased from 7.9% to 9.5%, and from 6.8% to 7.1% in 2022. The rate of inflation in Ukraine by the end of 2021 will reach 10.2%, and 6% in 2022.
4.0 Real Economy 4.1 Industrial production
September’s industrial production declined for the first time since March. For the first time since March 2021, industrial production in Ukraine declined in September by 0.9% on a year-on-year basis.
In September, the seasonally adjusted index of industrial production was 98.2% compared to August, a reduction of 1.8%. In September, the mining industry grew by 1% year on year, while coal production fell by 12.7%. The manufacturing industry fell by 1.1% due to a 10.6% drop in textile production, reported ukrstat.org.
Manufacturing output declined 1.1% y/y in September (after a 2.2% y/y growth in August). The decline was mostly due to a drop in chemical production (-9.6% y/y vs. -5.6% y/y in August) and food industry (-4.2% y/y vs. -4.8% y/y in August). Metals production stayed flat y/y in September (vs. 5.4% y/y growth in August) and machinery production inched up 0.7% y/y (+5.1%).
Mining sector production advanced 1.0% y/y in September (vs. a 2.5% y/y decline in August). In particular, iron ore production advanced 3.5% y/y (-6.7%), oil and gas production inched up 0.4% y/y (-1.6%). At the same time, coal production dropped 12.7% y/y (-9.9%).
The supply of electricity and natural gas declined 2.4% y/y (vs. 0.3% y/y growth in August).
Regionally, output declined in 17 out of 25 regions. It dropped the most in Chernivtsi (-23.2% y/y), Zakarpattia (-11.5% y/y) and Odesa (-8.6% y/y) regions. The highest industrial growth in September was in Vinnytsia (+10.1% y/y), Sumy (+9.6% y/y) and Dnipropetrovsk (+8.0% y/y).
The industrial performance is frustrating. The drop of metallurgical and machinery sectors from growth to stagnation drew all industrial output to the red amid low and/or uneven output in other sectors.
Analysts at Concorde Capital don’t see any factors which could help Ukraine’s industrial production accelerate through the end of the year. They expect Ukraine’s industrial output to increase 1.5% y/y in 2021 (vs. 4.5% y/y decline in 2020).
12 UKRAINE Country Report November 2021 www.intellinews.com