Ukraine: Main sectoral indices (% yoy) |
Ukrstat, NBU, RBI/Raiffeisen Research |
Ukraine: Main sectoral indices (% yoy) |
Ukrstat, NBU, RBI/Raiffeisen Research |
The main sectoral indicators' performance worsened in January, as expected. The main reason for this was lower business activity, declining consumer and investment demand due to increased quarantine restrictions and relatively cold weather in the second half of the month. The Index of Key Sector Output (IKSO) fell by 3.7% after a substantial 9.9% increase in December, reflecting a more negative trend in all sectors covered by the high-frequency statistics.
Our assumption about industrial production results was only partly realised, with growth in heat and energy production (3.2%) confirmed. However, industrial production fell by 4% despite a low comparative base, with a sharp decline in manufacturing (-6.5%). The same trend is likely to continue in February, but as the weather and epidemiological situation improves in the coming months, the industry will compensate for the losses and enter the positive zone, recording an increase of around 3% for the year.
The growth rate in retail sales fell to 3.5% from 13.4% in December, recording the worst performance in January since 2018. However, this is directly attributable to severe offline shopping constraints, which were known in advance, and individual purchases were likely to be postponed to December or February by consumers. The growth in online trade, together with improved logistics and its coverage of new territories and consumer groups on the back of increased competition, sales scaling and new business cooperation (OLX-Ukrposhta) will make sales of household appliances and non-food goods less reliant on restrictions.
Relatively cold weather expectedly led to a fall in construction (-12.9%), with engineering structures (-17.9%) accounting for the most significant drop. However, this is only temporary and, as in the previous year, construction will show a year-on-year increase, stimulated by the continuation of the government's 'Big Construction' programme.
Low immunization rates against a background of worsening epidemiological situation, new infections, mortality from Covid-19, additional restrictions in some regions are not conducive to a speedy recovery. We expect, as before, a slight drop in GDP in Q1 21 and an increase of 3.8% for the year.