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UPDATE 1-Ukraine industrial output down 31.6 pct y/y in Feb

Published 03/16/2009, 01:10 PM
Updated 03/16/2009, 01:16 PM
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(adds details, prime minister's comments)

By Natalya Zinets

KIEV, March 16 (Reuters) - Ukraine's industrial output plunged by more than 30 percent in February, official statistics showed on Monday, but the fall was less pronounced than in January and rose in month-on-month terms.

Figures issued by the State Statistics Committee showed output down 31.6 percent compared to the February 2008 figure. Output sank 34.1 percent year-on-year in January.

But the output figure amounted to a 5.4 percent rise on the January figure and Prime Minister Yulia Tymoshenko said that meant Ukraine was weathering the world financial crisis well.

However, January was marked by the long New Year holiday period and a decline in activity during a cutoff of imported gas supplies from Russia.

"Despite the extremely difficult situation in Ukraine's economy and banking system we have the first positive figure in terms of growth...," Tymoshenko told an extraordinary cabinet meeting.

"At the moment, we can only take the statistical temperature in monthly terms, because it is impossible to compare with last year's figure. The entire world has changed, statistics are totally changed. Month-to-month changes are more concrete."

The prime minister acknowledged that the year-on-year figure was "unpleasant", but reflected the fact that "the entire world was passing through a second stage of the financial crisis".

The committee's data showed that in the first two months of 2009, output was down 32.8 percent, year-on-year, compared to Reuters poll forecast for a 28.2 percent decline.

The sharpest fall in February occurred in machine building -- a 53.5 percent drop, building materials (down 51.1 percent) and steelmaking (down 40.7 percent).

All sectors recorded increases compared to January - with the exception of coke production and oil refining.

EXPORT INDUSTRIES

The world financial crisis has battered Ukraine, sharply reducing the steel and chemical markets on which its exporters depend. Two more Ukrainian banks were placed in receivership on Monday, bringing the total number to 11.

Kiev has clinched a $16.4 billion loan deal with the International Monetary Fund, but the Fund has suspended the release of the loan's second tranche while discussions proceed on several issues, including the size of the budget deficit.

The top financial adviser of President Viktor Yushchenko, the prime minister's arch rival, meanwhile said Ukraine had to find ways of balancing the budget to secure further tranches.

"The IMF's main demands centre on the situation with an unbalanced budget amounting to about 20 billion hryvnias ($2.6 billion)," Oleksander Shlapak told a briefing. "That is the aim of several bills now before parliament."

The government last week took measures to meet IMF demands, including the repeal of budget provisions limiting the actions of the central bank.

The Fund welcomed the measures but no date has been set for the return to Ukraine of a mission to discuss resuming the flow of credits. (Additional reporting by Pavel Polityuk; writing by Ron Popeski; editing by Stephen Nisbet)

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