Ukraine Industry


Industrial production contraction moderates, records best result in 15 months

In September, industrial production fell 5.1% over the same month last year, according to data released by the State Statistics Service of Ukraine. The result was an improvement from August’s 5.8% decrease and marked the most moderate contraction in 15 months. However, September’s result still marked the 21st consecutive month of decline amid the geopolitical tensions in the country. Significant contractions—albeit moderate in the context of recent data—were recorded in manufacturing and in electricity, steam, gas and air conditioning. However, mining and quarrying expanded over the same month last year.

The ongoing crisis between the Ukrainian government and pro-Russian separatist groups has had a large negative impact on industry, which is already weak. The conflict has been centered in the eastern regions of Luhansk and Donetsk, Ukraine’s industrial heartland, which have been plagued with steep contractions for the past year. However, in September, industrial output in Donetsk returned to growth for the first time in over a year and Luhansk expanded for the second consecutive month.

On a monthly basis, industrial production rose a seasonally-adjusted 5.9% in September, which notably contrasted August’s 4.2% decrease. The annual average variation in industrial output in September improved for a second consecutive month, confirming the end of the uninterrupted downward trend that had been in place since May 2014, rising from minus 17.4% in August to minus 16.5%.

FocusEconomics Consensus Forecast participants’ project that industrial output will plummet 14.6% in 2015, which is down 0.3 percentage points from last month’s forecast. For 2016, panelists expect industrial production to rise 3.0%, which is down down 0.2 percentage points from last month’s forecast.

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Ukraine Industry Chart

Ukraine Industry September 2015

Note: Year-on-year and annual average variation of industrial production in %.
Source: State Statistics Service of Ukraine and FocusEconomics calculations.

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