Page 19 - UKRRptMay21

decrease to 58% in 2021 and 45% in 2026 (from 61% in 2020). The IMF numbers imply the fund is expecting stability for the Ukrainian hryvnia vs. the dollar, as the UAH/$ rate is expected to be on average 28.0 in 2021 and between 27.6 and 27.8 in the next five years.
J.P. Morgan has predicted that Ukraine’s GDP will grow by 5.6% this year,
said the bank in its April commentary. This is higher than Ukraine’s Central Bank, which lowered its forecast last week to 3.8%. The Economy Ministry came out last week with a ‘consensus forecast’ of 4.1%. J.P. Morgan bases its optimism on EU and global growth in the second half, and on a rebuilding of inventories and a jump in investment in Ukraine. The bank also has predicted that IMF money will flow again to Ukraine in August-September.
4.0 Real Economy 4.1 Industrial production
Ukraine’s industrial output increased 2.1% y/y in March after a 4.6% y/y decline in February, the State Statistics Service reported on April 22. The seasonally adjusted output advanced 1.8% m/m in March. In 1Q21, industrial output declined 2.0% y/y.
Manufacturing output increased 2.5% y/y in March (after a 6.7% y/y decline in February). In particular, output in metallurgy picked up 5.2% y/y (after a 3.5% y/y decline in February), the output in machinery advanced 7.6% y/y (after dropping 7.0% y/y in February). The growth of chemicals production accelerated to 14.3% y/y (from 13.5% y/y in February). Meanwhile, food output declined 6.2% y/y (vs. a 13.1% y/y decline in February), pharmaceuticals production plummeted 18.2% y/y (vs. a 0.4% y/y increase in February).
Mining production declined 1.5% y/y (from a 3.9% y/y decline in February). In particular, oil and gas production dropped 4.4% y/y. At the same time, iron ore production advanced 3.2% y/y, coal production jumped 8.1% y/y.
The supply of electricity & natural gas increased 7.3% y/y, accelerating from 1.9% y/y growth in February.
Regionally, the highest industrial growth in March was observed in Volyn (18.2% y/y), Zhytomyr (15.6% y/y) and Ivano-Frankivsk (15.4% y/y). Ten out of 25 regions posted a decline of industrial output. It dropped the most in Kirovohrad (-19.6% y/y), Kherson (-7.5% y/y) and Mykolayiv regions (-6.4% y/y).
The March growth was not big enough to offset declines in January and February. The first quarter was down 2% y/y. Last year, industrial production dropped by 5.2% compared to 2019.
The significant improvement in the metallurgical and machinery sectors halted a downward trend in Ukraine’s manufacturing. The lower comparative base of March 2020 also helped to show a more decent statistical result.
Meanwhile, the decline in domestic food production is still significant which is likely to be the aftermath of agricultural supply drops because of lowered agricultural production in 2020.
Ukraine’s industry will post significant growth in 2Q21, which will be mostly the result of a low comparative base of 2Q20, as it was hit the most by nation-wide lockdown. We expect that the industrial growth in 2021 will not be much more
19 UKRAINE Country Report May 2021 www.intellinews.com