Ukraine: Expansion in industrial production eases in May

In May, industrial production increased 0.2% over the same month last year, according to data released by the State Statistics Service of Ukraine. The result marked a clear deceleration from April’s 3.5% expansion but nonetheless marked the fourth consecutive month of growth. Growth was supported by an expansion in manufacturing which more than offset a contraction in mining and quarrying and the electricity, gas, steam and air conditioning components.

Looking at the regions, industrial production in Luhansk nearly doubled, as activity continues to recover. The ongoing crisis between the Ukrainian government and pro-Russian separatist groups caused industrial production to plummet by over 10% in 2015, as the conflict is centered in the eastern regions of Luhansk and Donetsk, Ukraine’s industrial heartland. However, industrial production began to turnaround at the onset of 2016, although largely due to the low base from last year.

On a monthly basis, industrial production contracted a seasonally-adjusted 3.7% in May, which followed April’s 3.4% contraction. Despite the monthly deterioration, the overall trend continued to improve and annual average variation in industrial output jumped from April’s minus 4.6% to minus 3.0% in May.

FocusEconomics Consensus Forecast participants’ project that industrial output will grow 2.4% in 2016, which is up 0.1 percentage points from last month’s forecast. For 2017, panelists expect industrial production to rise 3.9%.