Page 24 - UKRRptJun21

3.2 Macro outlook
Ukraine’s Ministry of Economy lowered its real GDP forecast to 4.1% y/y from 4.6% y/y for 2021 and to 3.8% y/y from 4.3% y/y for 2022, Interfax Ukraine reported on May 21 citing ex-minister Ihor Petrashko.
The ex-minister informed that the updated forecast would be used for developing a three-year Budget Declaration. Meanwhile, the drop of the economy in the first quarter of 2021 of 2.0% y/y was less severe than the ministry expected (-3.0% y/y). The average inflation in 2021 will amount 8.8%, the ministry predicts.
The government’s updated GDP forecast coincides with our current vision. Apparently, the government has no break-through economic strategy, and it is less risky to ground the country’s budget on a more conservative macroeconomic forecast. In addition, the accuracy of the economic outlook for 2021 is affected by the very low and uneven comparative base of the previous year as well as unclear outlook for further pandemic developments in the country.
4.0 Real Economy 4.1 Industrial production
Ukraine’s industrial output exploded in April, increasing by 13.0% y/y from a 2.1% y/y growth in March largely thanks to the low base effect from the pandemic, the State Statistics Service reported on May 24.
Seasonally adjusted output advanced a much more modest 2.7% m/m in April and in the first fur months of this year industrial output inched up 1.5% y/y (vs. 7.0% y/y decline in 4M20).
“The high year-on-year industrial growth in April was expected given the bottomed-out comparative base of April 2020 (-15.1% y/y),” Evgeniya Akhtyrko of Concorde Capital said in a note.
All of this year’s indicators are going to be distorted by the ow base effects as the pandemic was in full swing by April last year.
Manufacturing output surged 18.0% y/y in April (after a 2.5% y/y increase in March). The accelerated growth was mostly driven by metallurgy and machinery, which advanced 29.1% y/y and 41.0% y/y respectively. In addition, textile production surged 58.2%, wood processing added 32.7% y/y. Chemicals production increased 8.6% y/y. Meanwhile, food production dropped 3.4% y/y and pharmaceuticals dropped 10.0% y/y, Concorde Capital reported.
Mining production increased 6.9% y/y (vs. a 1.5% y/y decline in March). In particular, coal production surged 44.9% y/y, iron ore production advanced 11.8% y/y. Meanwhile, oil and gas production declined 3.8% y/y.
The supply of electricity & natural gas increased 4.5% y/y, slowing from 7.3% y/y growth in March.
Regionally, the highest industrial growth in April was observed in Chernivtsi (two-fold y/y increase), Ternopil (46.0% y/y) and Zakarpattia (42.0% y/y). Six
24 UKRAINE Country Report XXXX 2018 www.intellinews.com