The NBU production index growth accelerated to 3.5% last year from 2.1% in 2017. Accordingly, GDP growth accelerated to 3.3%, according to NBU estimates, from 2.5% in 2017. The acceleration was partly on base effects, as growth had been hampered in 2017 by the blockade of the eastern Donbass industrial area imposed by President Petro Poroshenko. Agriculture, as well as trade for the second straight year on rapid wage growth, were the two main growth engines last year. Growth in agriculture was on the back of a record grain harvest of more than 70 million tons. By contrast, growth in manufacturing industry was negligible. The NBU attributed this to logistical problems, relatively low prices, and repairs at some key facilities in the metallurgical and chemical branches.
In December alone, production index fell by 2.1% y/y after four months of growth. This was on the back of 8.6% decline in the manufacturing industry and 8.8% decline in construction because of unusually cold weather. At the same time, cold weather boosted growth in the utility sector to 11.1% y/y. Growth in retail trade slowed to 4.9% y/y on base effects. More on the upside, agriculture grew by 2.8% y/y in December after 7.8% decline in November.