(Adds output figures for Luhansk, Donetsk, background on effect
KIEV Aug 18 Ukrainian industrial production
fell in July at its steepest rate since the 2008-2009 global
financial crisis, as months of conflict between government
forces and separatist rebels took its toll on Ukraine's
Ukrainian troops and pro-Russian rebels have been fighting
since April in the heavily industrialised eastern regions of
Donetsk and Luhansk, a conflict that has destroyed
infrastructure and disrupted supply networks.
July's output fell 12.1 percent from July a year ago,
accelerating from a 5 percent drop in June, the state statistics
service said on Monday.
Production fell 28.5 percent in Donetsk and 56 percent in
Luhansk in July from last July, the state statistics service
said. The two regions, which produce most of the country's coal
and a significant amount of steel, together contributed nearly
17 percent of Ukrainian gross domestic product in 2013.
"Looking ahead, everything will depend on the military
conflict and its destructiveness. August is likely to be as bad
as July," said Olena Bilan, chief economist at Dragon Capital.
Last week it emerged that around half of the 115 coal mines
in Ukraine, Europe's second-largest coal producer, have halted
production entirely. The country's largest steelmaker, Metinvest
, is no longer accepting new orders because the
turmoil has forced it to cut production.
Ukraine produced 26.1 percent less coal in July than a year
earlier and metals output fell 12.3 percent, according to
Monday's state statistics service data.
Month on month, total industrial output fell 2.2 percent
last month after a drop of 1.5 percent in June.
(Reporting by Natalia Zinets; Writing by Alessandra Prentice;
Editing by Richard Balmforth, Larry King)