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We are likely to see quite a significant decline of industrial output in May as well, as the quarantine restrictions were in place for most of the month. Analysts project that the decline of Ukraine’s industry will ease in 2H20. However, output will be greatly affected by both domestic and external demand cooling. We expect Ukraine’s industrial output will decline 7% y/y in 2020 (vs. a 0.5% y/y decline in 2019).
4.2​ Inflation
4.2.1​ CPI dynamics
Inflation has not taken off despite the slide in the value of the hryvnia but the NBU forecast that inflation will end the year at about 6% this year, which is still better than the double digit rates of recent years.
Inflation in Ukraine slowed to 2.1% in April year-on-year from 2.3% in March, ​according to the State Statistics Service. Month-on-month inflation remained flat at 0.8% compared to March.
The National Bank of Ukraine (NBU) major success in 2019 was to rapidly bring inflation down from the double digits it recorded during the recession. Inflation was 4.1% in 2019 and was expected to fall further this year.
The NBU improved its inflation forecast for 2020 at the end of January from 5% to 4.8%. However, in April, the NBU worsened it to 6% due the effects of the current crisis. According to the central bank, in the first half of this year, annual inflation will be 4.8%.
According to the State Statistics Service, underlying inflation in April this year
23​ UKRAINE Country Report​ June 2020 ​ ​www.intellinews.com