Mongolian Economy

    Over the past 25 years, Mongolia has transformed into a vibrant democracy, with three times the level of GDP per capita and increasing school enrolments, and dramatic declines in maternal and child mortality. With vast agricultural and mineral resources and an increasingly educated population, Mongolia’s long-term development prospects are bright. 

    After a sharp slowdown during 2014-16 driven by a fall in commodity prices and declining FDI, the Mongolian economy strongly recovered in 2017 and 2018H1. GDP growth rate increased from 1.2 percent in 2016 to 5.3 percent in 2017 and 6.3 percent the first half of 2018. Strong growth momentum was supported by steady commodity exports (coal and copper), a recovery in FDI, and improved business sentiments as well as effective implementation of economic adjustment program by the government. Growth outlook remains positive in 2018 and beyond, mainly supported by robust growth in private consumption and private investment in mining and manufacturing. Short and medium term risks to the outlook include political uncertainty, commodity shocks, border bottlenecks, and poor handling of money laundering issues. Despite the improving outlook, structural challenges which could amplify the vulnerability of the economy to commodity price or other shocks given its reliance on the mining sector (over 20 percent of GDP) remain.

    In the boom years following 2010, poverty fell as the economy grew. Between 2014 and 2016, however, when the non-mining economy was particularly hit by falling investment and declining private consumption, Mongolia’s poverty rate rose again to the level of 2012, a worrying development. Improving household incomes in 2017-2018H1 and positive outlook augur well for poverty reduction after the 2016 increase. In the coming years, fiscally sustainable labor and social protection policies coupled with positive outlook will be key to reducing poverty.

    Mongolia’s economic freedom score is 55.7, making its economy the 125th freest in the 2018 Index. Its overall score has increased by 0.9 point, with improvements in monetary freedom, fiscal health, and judicial effectiveness outweighing declines in the government integrity, labor freedom, and government spending indicators. Mongolia is ranked 27th among 43 countries in the Asia–Pacific region, and its overall score is below the regional and world averages.

    To ensure sustainable and inclusive growth and to reduce poverty, Mongolia will need to strengthen governance; build institutional capacity to manage public revenues efficiently; allocate its resources effectively among spending, investing, and saving; and ensure equal opportunities to all its citizens in urban and rural areas. It needs to do this in a manner which protects the environment and intergenerational equity.

    For more Economic news: https://mongolianeconomy.mn/ 

    Mongolia Economic Growth

    Economic growth is expected to slow this year and next mostly reflecting lower mineral demand from China. While bolder fiscal support ahead of the 2020–2021 election cycle and the expansion of the Oyu Tolgoi should both buttress the economy, Mongolia remains highly vulnerable to changes in external conditions and fiscal slippage. FocusEconomics panelists see growth at 6.6% in 2019, and 5.9% in 2020, which is unchanged from last month’s forecast.

     

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