IMPACT OF THE COVID-19 PANDEMIC ON THE INDUSTRIAL SECTOR: IMPLICATIONS FOR ECONOMIC POLICY

Abstract

The COVID-19 pandemic had a major impact on the economy around the world, damaging many areas of daily life. The industrial sector has been affected by the effects of industrial closures, reduced economic activity, and disruptions in logistics and transportation. The damage caused by the crisis has not yet been specifically assessed, as the industrial sector was not the most affected by the pandemic compared to other sectors of the economy. The subject of the study is the industrial sector of Ukraine and the EU. The aim of the article is to assess the impact of the COVID-19 pandemic on industrial development in Ukraine and the EU, as well as to propose economic policy measures to achieve stabilization in the industrial sector. Since industry is the foundation of economic growth and development, it is necessary to assess the depth of its decline and find possible solutions to get out of the recession. The theoretical analysis of the article is based on recent work by scientists in the field of industrial development, as well as on the authors' developments assessing the impact of the COVID-19 pandemic on the economy. The COVID-19 pandemic created the following problems for Ukraine's economy and industry: a decrease in aggregate global demand and a decline in business activity, which led to lower prices on world commodity markets; strengthening of government regulation; raw-material orientation of Ukraine's exports and the significant dependence of industrial enterprises on world prices for raw materials; transport and logistics problems with raw material supply chains; lower business expectations and reduced investment due to significant uncertainty. The findings showed that the coronavirus crisis hit the industrial sectors mainly in April 2020, leading to a 16.1% decline in industrial production in Ukraine and an 18.6% decline in the EU. Such industries as automobile manufacturing, leather manufacturing, light industry, furniture manufacturing, coal mining, oil and gas extraction were hit the hardest. The following measures to stabilize the industrial sector are proposed: support for domestic demand for the products of industries, namely metallurgy, machine building, and chemical industry, which are mainly export-oriented and very sensitive to changes in global demand; stimulation and development of high value-added production; acceleration of the digitalization process within national borders; support for the industrial sector in its pursuit of environmentally friendly production, and others.