Page 15 - UKRRptAug19

expectations of a larger harvest of grain crops.
Domestic demand will remain the main driver of economic growth over the coming years. Private consumption growth will decelerate, albeit remaining high owing to an increase in real household income – wages, pensions, and remittances from abroad. Capital investment will continue to grow rapidly, which will also provide significant support to the economy.
Economic growth will be dampened by a weak global economic activity and decrease in gas transit to European countries starting in 2020, due to the construction of bypassing gas pipelines.
4.0 Real Economy 4.1 Industrial production
Ukrainian industrial output dropped 2.3% y/y in June after 1.6% growth in May. On a seasonally and calendar-adjusted basis, output slid 1.3% m/m in June. In 1H19, it was up 0.5% y/y, compared with 1.6% growth in 2018.
June's sluggish performance was solely driven by manufacturing (output was down 6.1% y/y). Most manufacturing subsectors demonstrated declines (of 0.7-13.7% y/y). Only pharmaceuticals and chemicals finished in positive territory (up 2.2% and 6.3%, respectively). Mining and quarrying growth slowed to 4.3% y/y from 4.6% in May. The growth of electricity, gas, steam and air conditioning supply recovered to 4.4% y/y from a 0.3% contraction in May.
On the whole, the June statistics coincide with our view that industrial production growth will slow in 2019.
15 UKRAINE Country Report August 2019 www.intellinews.com