Page 15 - UKRRptJan21
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     4.0​ Real Economy 4.1​ Industrial production
         The decline of Ukraine’s industrial output slowed to 0.3% y/y in November from 5.0% y/y in October​, the State Statistics Service reported on December 23. Seasonally adjusted output increased 1.5% m/m in November. In 11M20, industrial output dropped 6.2% y/y.
Manufacturing output fell 3.4% y/y in November (after a 6.6% y/y decline in October). In particular, the decline in machinery plummeted to 15.3% y/y (vs. 18.6% y/y in October), chemical production fell 13.4% y/y (vs. 1.9% y/y growth in October), and food production dropped 5.4% y/y (vs. 7.2% y/y in October). At the same time, the output in metallurgy jumped 8.2% y/y (vs. a 3.3% y/y decline in October).
Mining output inched up 1.8% y/y (vs. a 2.5% y/y slide in October), driven by a surge in iron ore production of 10.6% y/y. At the same time, coal production fell 3.6% y/y and oil & gas production dropped 3.1% y/y. The supply of electricity & natural gas advanced 10.0% y/y after a 1.8% y/y decline in October.
Regionally, the steepest declines were observed in the Chernivtsi (-25.4% y/y), Rivne (-20.3% y/y), and Ivano-Frankivsk (-15.2% y/y) regions. Meanwhile, ten out of 25 regions posted growth in industrial output. It grew the most in Ukraine-controlled Donetsk (20.7% y/y), Odesa (13.4% y/y) and Zhytomyr (7.8% y/y).
The decline of industrial output cooled off significantly in November. It was mostly due to the advance in iron ore and metals production, driven by renewal of external demand, as well as the low comparative base effect.
“At the same time, the machinery sector remains deeply depressed, chemical production has failed to demonstrate consistent improvement, and the decline in food production is continuing despite strong household consumption,” Evgeniya Akhtyrko of Concorde Capital said in a note. “If the improvement in iron ore and metals production continues, Ukraine industry might post a slight growth in December, landing industrial output at 5.5% decline in 2020.”
Ukraine’s industry has been struggling all year in 2020 and the decline of Ukraine’s industrial output intensified to 5.0% year on year in October from 4.4% y/y in September, the State Statistics Service reported on November 23. Seasonally adjusted output slid 0.5% month on month in October. In 10M20, industrial output dropped 6.8% y/y.
Industry is being dragged down by lack of demand – both at home and abroad – as a result of the coronacrisis, but is expected to improve in 2021.
Trading economics estimates industrial production increase to 6.5% by the end of 2021, which is still not a stellar level. In the long-term, the Ukraine industrial production is projected to trend around 4.1% in 2021 and 1% in 2022, according to Trading Economics as structural problems and the lack of investment hold industry back.
The trends seen at the end of 2020 are likely to persist into 2021. Manufacturing output fell 6.6% y/y in October (after a 5.8% y/y decline in September). In particular, the decline in machinery plummeted to 18.6% y/y compared with 9.1% y/y in September, food production dropped 7.2% y/y compared with 8.7% y/y in September.
 15​ UKRAINE Country Report​ January 2021 ​ ​

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