Ukraine Industry July 2016

Ukraine

Ukraine: Industrial output contracts for second consecutive month in July

August 31, 2016

Industrial production contracted for a second consecutive month in July, following four consecutive increases. According to data released by the State Statistics Service of Ukraine, industrial production fell 0.2% annually, which followed the 3.4% contraction in June. The fall was again driven by declines in manufacturing production as well as in mining and quarrying output. Despite this, the growth trend continued to improve and the annual average variation in industrial output rose from June’s minus 1.8% to minus 0.7% in July.

Looking at the regions, the recovery in the eastern areas of Luhansk and Donetsk, Ukraine’s industrial heartland, lost momentum in July and output fell in both regions. The conflict between the Ukrainian government and pro-Russian separatist groups caused industrial production to plummet by over 10% in 2015. In the first half of 2016 data had indicated a turnaround, although this was largely due to the low base effect from last year.

That said, sequential data suggested a brighter picture for industrial production. In July, output jumped a seasonally-adjusted 7.0%, which contrasted a 2.1% contraction in June.

Following a substantial contraction in 2015, analysts expect Ukraine’s industrial production to recover part of the lost ground this year. FocusEconomics Consensus Forecast participants project that industrial output will grow 2.4% in 2016, which is unchanged from last month’s forecast. For 2017, panelists expect industrial production to rise 3.6%.


Author: Angela Bouzanis, Senior Economist

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Ukraine Industry July 2016

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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