Slow recovery of the world economy and recession in the euro area, which is Ukraine’s main trading partner, generated low demand for Ukrainian exports. A decline in CRB index, which started at the end of last year, accelerated further to 13.5% year on year in March, with metals prices having fallen by 11.6%. As a result, the output of metallurgy industry and machine-building fell by 1.6% and 5.6% year on year respectively. A contraction in the output of export-oriented industries was somewhat offset by a rise in the output of key industries– food industry (2.4% year on year) and chemical industry (9% year on year). As a consequence, industrial output shrank by 1.1% year on year in March, industrial production growth standing at 0.9% in the first quarter of 2012.
March saw a 5.6% year-on-year drop in the construction output, which suggested a slowing in domestic investment activity. According to estimates made by the Department, a slight contraction in capital budget expenditures, coupled with a high comparison basis of the previous year, were the key drivers of a downward trend in the construction output.
Low external demand was to some extent offset by robust domestic consumer demand, which was driven by high growth rates of real wages (real wage growth stood at 14.7% in the first quarter). In March, retail trade turnover and the volume of services rendered increased by 13.5% and 10.3% respectively.
Considerable costs incurred by agricultural producers, who had to re-sow agricultural crops partially, and a delay in the commencement of sowing season due to the unfavourable weather conditions resulted in a low agricultural output (agricultural output grew by 0.7% year on year in March, quarter-on-quarter agricultural output growth stood at 0.5%).
The divergent trends caused the production index of basic industries to grow at a slower pace. The production index of basic industries slowed down to 0.5% year on year in March, standing at 2.1% in the first quarter. According to the official data released by the State Statistical Service, real GDP grew at 1.8% year on year in the first quarter of 2012.