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bounce back in 2021 to 5% the multinational lender said. Macro-financial fundamentals remain relatively strong and able to absorb external shocks the bank believes.
There are no grounds for changing the forecast for the decline in Ukraine's real gross domestic product (GDP) in 2020 by 4.8%, ​there are discrepancies with the National Bank of Ukraine (NBU) regarding the forecast for the hryvnia exchange rate and inflation, Minister of Economic Development, Trade and Agriculture Ihor Petrashko has said.
Ukraine’s central bank downgraded its forecast of GDP shrinkage to 6-7%, from 5%,​ Dmytro Sologub, deputy governor of the National Bank of Ukraine said on May 27. “Based on the data on the decline in the first quarter, industrial production and transport in April, I think the decline may be more severe than expected,” he says in a lengthy interview. “As for transport, which was actually banned - we see almost minus 100% there. The situation is a little better in the restaurant business.”
The hryvnia exchange rate has recently strengthened and is now quite far from the benchmark defined in the state budget: UAH26.7/$1 against UAH29.5/$1.
4.0​ Real Economy 4.1​ Industrial production
Ukraine industrial output plummeted 16% in April. ​The deceleration of Ukraine's industrial output was reinforced in April to a 16.2% y/y fall from -7.7% y/y in March, the State Statistics Service reported on May 22. Seasonally adjusted output decreased 6.0% m/m. In 4M20, industrial output dropped 7.9% y/y.
Manufacturing output plummeted 20.3% y/y in April (after an 8.5% y/y decline in March). In particular, metallurgy output dropped 29.1% y/y (vs. a 15.8% y/y decline in March). Machinery production fell 35.6% y/y (after a 16.8% y/y decrease in March). Food production slid 6.5% y/y (vs. a 1.3% y/y decline in March). Meanwhile, the pharmaceutical industry surged 17.1% y/y (vs. 21.8% y/y growth in March), and chemical production jumped 6.5% y/y (after a 2.3% y/y advance in March).
Mining output fell 11.2% y/y in April, after declining 4.3% y/y March. In particular, coal production plunged 35.1% y/y, oil and natural gas production slid 3.5% y/y, and iron ore output dropped 15.6% y/y. The supply of electricity and natural gas declined 7.2% y/y in April after a 10.0% y/y drop in March.
Regionally, the steepest declines were observed in the Chernivtsi (-54.5% y/y), Ternopil (-32.0% y/y) and Dnipropetrovsk (-31.0% y/y) regions. Meanwhile, the Kirovohrad (3.2% y/y), Kherson (0.5% y/y) and Poltava (0.5% y/y) managed to show growth.
The decline of industrial output accelerated significantly in April, as this month fully absorbed all the negatives related to the quarantine restrictions. Being important contributors to Ukraine’s industrial output, metallurgy and machinery suffered the most as they are exposed to both domestic restrictions and the drop in external demand. Meanwhile, the food, pharmaceutical and chemical sectors –, which are more oriented towards the domestic market – were less affected, showing either a modest decline or even growth.
22​ UKRAINE Country Report​ June 2020 ​ ​www.intellinews.com