Ukraine industry decline eases to 17% drop in September

Макроэкономика 21.10.2014 Ukraine’s industrial output slowed to a 16.6% yoy decline in September compared to a 21.4% yoy drop in the prior month, Ukrstat reported on Oct. 17. The main factors in the improvement were the metals (-28.3% yoy vs. -30% yoy), machinery (-22.8% yoy vs. -31% yoy) and chemical sectors (-6.2% yoy vs. -19.6% yoy in August). At the same time, the decline in mining was almost flat (-27.1% yoy vs. -27.4% yoy) while utilities worsened (-18.8% yoy vs. -17.3% yoy). The decline in industrial output in the Luhansk region was reported unchanged compared to August (-85% yoy) while performance in the Donetsk region worsened to -59.5% yoy (vs. -58.7% yoy in the prior month). Alexander Paraschiy: September industrial output is much better than we expected. Continued warfare in the east undermines prospects for improvement and we anticipated industrial output contracting on average by nearly 20% yoy at least till the end of the year. Six of the nation’s western regions are behind the improved performance, having switched to double-digit growth (industry in the Ternopil region surged 52.5% yoy). Against the backdrop of the current trend, it’s likely that Ukrainian industry will contract at a rate of nearly 10% yoy in 2014. Still, in light of the extreme volatility in the economy, we prefer to maintain our previous forecast (-11.8% yoy) with a high chance for an upward revision if the positive tendency is preserved.