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fall in August).
Mining output declined 2.2% y/y in September after growing 2.7% y/y in August. In particular, iron ore production slid 1.0% y/y (vs. a 9.2% y/y surge in August).
At the same time, coal output dropped 1.5% y/y and oil and natural gas production fell 0.5% y/y. Production of electricity and natural gas slid 1.0% y/y in September (vs. 3.1% y/y growth in August).
Regionally, the steepest declines were observed in the Zakarpattia (-30.7% y/y), Ukraine-controlled Luhansk (-14.0% y/y), and Khmelnytskiy (-13.0% y/y) regions. Growth was strongest in the Odesa (18.1% y/y), Kirovohrad (12.6% y/y) and Ternopil (9.0% y/y) regions.
4.2 Inflation
The CBR now expects inflation to end this year at 3.2-3.7% and next year at 3.5-4.0%. While VTBC current forecast for 2019 (3.2%) falls right at the low end of the CBR's forecast range, the bank see significant downside risk for the CBR's 2020 forecast.
“In September, annualized core inflation (adjusted for seasonally volatile fruit and vegetable prices, regulated utility tariffs and fuel prices) was at just 2.1%, where it was in 2017. We do not see significant risks that core inflation will accelerate in 4Q19 and in 2020, as household demand is likely to remain weak given that real disposable income growth is very sluggish and retail loan growth is already slowing. Besides, in 2020 the effect of this January's VAT hike will evaporate fully. We expect annual inflation in 2020 of 3% or even lower. If we are right about this, the key rate might move below 6% next year,” the bank said in a note.
21 UKRAINE Country Report November 2019 www.intellinews.com