Ukraine's industrial production grew by 1.2% y/y in August after a 2.6% y/y drop in the month before, driven by chemicals, machinery and metals, the State Statistics Service reported on Sept 21. For the first eight months of 2017, production fell 0.4% y/y.
The result will be welcomed by the government, but Ukraine’s recovery from the deep recession of 2015 remains very fragile and the August industrial production result, while positive, remains well below potential and there is no sign of any industrial momentum building up.
Output of chemicals sped up to 33.0% y/y (26.7% y/y in July), machinery strengthened to 10.4% y/y (vs. 9.1% y/y in the prior month) and metals turned in 1.0% growth y/y from a 4.9% y/y decline in July. Mining fell 6.8% y/y (-9.4% y/y in the prior month) and utilities dropped 2.8% y/y (-11.9% y/y), reports Concorde Capital.
By region, the strongest decline was registered in the eastern provinces of Luhansk (-37.0% y/y), Donetsk (-13.6% y/y) with th capital Kyiv city also doing badly (-10.1% y/y). The best performers were the small regions of Chernihiv (23.6% y/y growth), Ivano-Frankivsk (21.9% y/y) and Khmelnytsk (14.2% y/y).
“Industrial production improved but it remained weaker than we expected. It’s particularly surprising to see metallurgy growing only by 1% y/y and iron ore extraction falling 3.1% y/y amid soaring steel prices and prices for iron ore at the global markets. In fact, the August results leave slim chances for our initial forecast of 1.4% y/y industrial growth to become reality. We are not revising our projection, however the tendency we observe tells us that industrial growth could be below the 1% mark in 2017,” said Alexander Paraschiy of Concorde Capital in a note.