The blockade of Ukraine’s rebel-held east is snuffing out an industrial revival. The two-month trade halt, formalized last week by President Petro Poroshenko, is already triggering downgrades to the economic outlook from the central bank and analysts alike. Data due Thursday are set to show growth in industrial production plummeted by more than half in February to an annual 2.2 percent. Having found its feet after a Russian-backed insurgency decimated factories and supply chains, Ukraine’s industrial recovery has hit a new hurdle. The blockade, started by disgruntled military veterans who oppose doing business with separatists, is seen erasing a fifth of metals production this year and knocking economic growth back below 2 percent. Ukraine’s $17.5 billion bailout is on hold while the International Monetary Fund assesses the situation. “Breaking ties with the seized regions is starting to affect production of steel, coal and coke,” said Oleksandr Pecherytsyn, chief economist at Credit Agricole SA’s subsidiary in Kiev. Metals output sank last month, according to data complied by producers’ association Ukrmetalurgprom. The blockade has stopped supplies of thermal coal to metals plants and power generators, raising the prospect of blackouts. Ukraine must purchase anthracite coal for electricity production from abroad, with the first imports expected by May, the Interfax news service reported, citing Deputy Energy Minister Halyna Karp. The rebel regions, which had been receiving crucial revenue from coal sales, have seized about 40 Ukrainian companies located on territory they hold. Billionaire Rinat Akhmetov’s steel-making holding Metinvest BV and DTEK Energy BV said that they’d lost control of assets there, without elaborating on the consequences for their overall business. Outlook Sours The upshot of the blockade for Ukraine is slower growth, according to the central bank. Gross domestic product will grow 1.9 percent rather than the 2.8 percent predicted previously, it said Tuesday. The negative impact will be partially offset by favorable export prices for goods such as agricultural commodities, while the impact on the hryvnia, eastern Europe’s worst-performing currency this year, will be limited, the bank said. Ukraine must agree on its new economic forecasts with the IMF to unlock the next $1 billion disbursement from its rescue loan. The Washington-based lender had originally assumed the trade blockade would be temporary. With the embargo now permanent, the uptick in industry looks like it’s over. “We’ve already revised our annual forecast to zero,” said Oleksiy Blinov, chief economist of Alfa-Bank Ukraine.