KYIV, June 8 – Ukraine’s economy will probably accelerate contraction to 5% on the year in January through April due to coronavirus lockdown since the middle of March, the Economic Development, Trade and Agriculture Ministry reported.

The country’s economy contracted 1.5% on the year in January-March, the ministry said.

"Together with the stimulating factors of the previous periods, the reduction in GDP in January-April was estimated by the Ministry of Economy at 5%, which is fully consistent with the forecast (in the first quarter of 2020, according to the State Statistics Service, the decline in GDP was 1.5%)," the ministry said in a statement posted on its website.

Ukraine’s manufacturing index declined 6.7% in January-April, while in January-March this indicator had dipped by 3.8%.

According to the ministry, the drop in industrial production over the four months of this year amounted to 7.9%. The most affected by lower prices and demand were export-oriented sectors and the investment segment. The decline in mechanical engineering amounted to 19.7%, metallurgy 15.4%, textile industry 13.6%, and chemical industry some 13%.

"In April 2020, production volumes in complex heavy manufacturing continued a rapid decline, by 35.6% due to a decrease in investment activity and the preservation of the stimulating factors that had begun earlier – competition from imports, unstable domestic orders," the ministry said.

"In January-April 2020, for the first time since January-February 2016, there was a fall in domestic trade by 1.8% (compared with a growth of 1.2% in January-March 2020). This trend was caused by a deepening drop in wholesale trade due to a low demand amid a decline in economic activity in almost all sectors of the economy, a slowdown in the retail segment of the market (due to a significant drop in April)," the ministry said.

According to the survey, agricultural volumes dipped by 1.4% in the four months.

"Given the seasonal nature of crop production, from January to May gross agricultural output is formed exclusively from livestock production," the ministry said.

At the same time, a slight improvement in the situation in agriculture was recorded due to the adaptation of the industry to new conditions – the increase in breeding animals and poultry resumed.

However, the Ministry of Economy notes the industry suffers from high financial costs for raising cattle and increasing competition in the domestic market with imported dairy products. An additional negative factor is the decrease in external demand due to quarantine in Ukraine's partner countries. (om/ez)