Prices for industrial products fell for three months in a row

According to the State Statistics Service, industrial producers reduced prices for their products by 5.9% in January 2020 compared to January 2019.

By January this year, prices for industrial products had been falling for three months in a row, but in the end, the downward trend slowed down a bit:

• November 2019 — minus 4.5%;
• December 2019 — minus 7.4%;
• January 2020 — minus 5.9%.

In the first month of the current year, prices in the mining sector fell by 16.6% on the average. The biggest drop in prices (31.5%) was recorded in the black coal mining sector, followed by hydrocarbons (20.5%) and iron ore (11.8%) mining.

In the processing industry, prices fell by 5.5%. In this segment, the biggest price drop was recorded in steelmaking and production of finished metal products (17.9%).

The drop in the industrial product price index reflects the ongoing decrease in the demand for products of most manufacturers, in both foreign and domestic markets. Therefore, Ukraine should expect further shrinking of industrial production and a slowdown in the GDP growth rate in the short-term perspective.

This is also proven by the recent survey conducted by the State Statistics Service of Ukraine. As GMK Center reported earlier, Ukraine’s industrial companies expected a drop in capacity utilization rate to 61.6% in Q1 2020, 3.9 pp. down from Q4 2019.

In 2019, prices for industrial products showed a downward trend for the first time in the history of independent Ukraine. The drop was drastic and reached 7.4%.

In 2019, industrial production in Ukraine decreased by 1.8% compared to 2018. Importantly, a steady downward trend was recorded from June to December last year.

As a result, Ukraine’s GDP growth rate slowed down to 3.3% in 2019 (from 3.4% in 2018).