Page 25 - UKRRptSept21

4.0 Real Economy 4.1 Industrial production
Ukraine’s industrial output rose 1.1% year on year in June, slowing from 5.4% y/y growth in May, the State Statistics Service reported on July 22. Seasonally adjusted output declined 0.7% month on month in June.
In 1H21, industrial output increased 2.1% y/y (vs. a 7.6% y/y decline in 1H20).
Manufacturing output increased 2.0% y/y in June (after an 8.0% y/y increase in May). In particular, output in metallurgy slowed to 7.0% y/y growth (from a 12.2% y/y jump in May), and machinery output advanced 17.6% y/y (vs. 28.5% y/y in May). At the same time, food production dropped 16.3% y/y and chemicals declined 7.7% y/y.
Mining sector’s production slowed to 2.5% y/y growth (from 6.9% y/y growth in May). In particular, coal production increased 3.5% y/y, and iron ore production advanced 4.2% y/y. Meanwhile, oil and gas production declined by 1.3% y/y.
The supply of electricity & natural gas declined 5.5% y/y (vs. a 3.5% y/y decline in May).
Regionally, the highest industrial growth in June was in Odesa (72.7% y/y%), Rivne (22.3% y/y) and Zakarpattia (21.3% y/y). Ten out of 25 regions posted a decline of industrial output, which dropped the most in Kirovohrad (-34.3% y/y), Ukraine-controlled Luhansk (-23.0% y/y) and Vinnytsia (-12.9% y/y).
“The industrial results in June are disappointing. The growth in metallurgy and mining is slowing, as the effect of the low comparative base of the previous year wears off and unutilised capacity reserves are being exhausted. Food industry is unable to exit the downward trend even despite a healthy consumer demand. Other important industrial sectors are failing to demonstrate a consistent improvement. With such a weak result for 1H21 we don’t see much chance for Ukraine’s industry to be anywhere close to rebounding from the fallout of 2020 (-4.5% y/y). If the combination of supply and demand doesn’t improve substantially in 2H21, Ukraine’s industrial growth is likely to land [at] around 2% in 2021,” an analyst at the Kyiv-based Concorde Capital brokerage said in a research note.
25 UKRAINE Country Report September 2021 www.intellinews.com