Ukraine Industry December 2015


Industrial production records smallest contraction since May 2014

In December, industrial production fell 2.1% over the same month last year, according to data released by the State Statistics Service of Ukraine. The result was an improvement from November’s 4.9% decrease and marked the most moderate contraction since May 2014. Yet, November’s result still marked the 24th consecutive month of decline amid the geopolitical tensions in the country. Moderate contractions—in the context of recent data—were recorded in manufacturing and in electricity, steam, gas and air conditioning. However, mining and quarrying returned to expansion in December.

The ongoing crisis between the Ukrainian government and pro-Russian separatist groups has had a large negative impact on industry over the past year. The conflict has been centered in the eastern regions of Luhansk and Donetsk, Ukraine’s industrial heartland, which had been plagued with steep contractions for the majority of the conflict. However, in December, industrial production in Luhansk expanded a notable 67.0% over the same period of the previous year. Yet, this improvement partly reflects a base effect due to the sharp drop in production recorded in December 2014 as a result of escalated fighting. In contrast, industrial production in Donetsk fell 14.7% in December.

On a monthly basis, industrial production expanded a seasonally-adjusted 1.0% in December, which contrasted November’s 1.7% decrease. The annual average variation in industrial output in December improved for a fifth consecutive month, confirming the end of the uninterrupted downward trend that had been in place since May 2014, rising from minus 14.7% to minus 13.5%.

FocusEconomics Consensus Forecast participants’ project that industrial output will grow 2.7% in 2016, which is down 0.3 percentage points from last month’s forecast. For 2017, panelists expect industrial production to rise 4.2%.

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Ukraine Industry Chart

Ukraine Industry December 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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