Publication: Mongolia Economic Update, November 2024: Sustaining the Gains - Special Focus : Distributional Impacts of Mongolia’s Fiscal System
Loading...
Other Files
37 downloads
Date
2024-12-16
ISSN
Published
2024-12-16
Author(s)
Editor(s)
Abstract
Mongolia’s coal-driven economic growth since 2023 has elevated the country to upper-middle-income status (UMIC) in 2024. Real gross domestic product (GDP) growth has remained robust, driven by mining and transport services, despite a sharp contraction in the agriculture sector. On the demand side, domestic demand was a key driver of growth, while the contribution of net exports to economic growth turned negative despite strong export performance. Boosted by increased income and trade-related revenues, the fiscal balance remained in surplus despite sustained high spending. In addition, Mongolia should consider reforms to its fiscal system to enhance its effectiveness and efficiency in tackling poverty and income inequality. The special chapter of this MEU summarizes the findings from a forthcoming World Bank analysis (commitment to equity) on the distributional impacts of the Mongolia’s fiscal system in chapter 2. This analysis reveals that while the fiscal system – encompassing both taxation and transfers - has a marginal effect on reducing poverty, it exhibits strong broad-based redistributive effects.
Link to Data Set
Citation
“World Bank. 2024. Mongolia Economic Update, November 2024: Sustaining the Gains - Special Focus : Distributional Impacts of Mongolia’s Fiscal System. © World Bank. http://hdl.handle.net/10986/42544 License: CC BY-NC 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Related items
Showing items related by metadata.
Publication Mongolia Economic Update, November 2013(World Bank, Washington, DC, 2013-11)In 2013, the Mongolian economy is expected to maintain double digit growth due to the start of copper production of the Oyu Tolgoi (OT) mine and expansionary economic policies. Yet, the economy is facing a significant challenge from growing balance of payments pressures as the foreign direct investment (FDI) inflow declines and the mineral exports remain weak. A substantial balance of payments imbalance stems from a weakening minerals market but also largely reflects the consequences of pro-cyclical economic management over the last two years. Mongolia may also face a downside risk from an uncertain global economic environment and further dampening of minerals market. Macro-economic and financial vulnerabilities are growing due to continuous expansionary fiscal and monetary policies reflected in significant off-budget spending and rapid credit growth. The government took a series of positive measures in recent months to address the challenges including the adoption of the new investment law, announcement of a fiscal consolidation plan, and subsequent amendment of the 2013 budget to tighten budget spending. Yet, further efforts are needed to shift the growth-oriented economic policies toward economic stability and rebuilding macro-economic policy buffers, in light of uncertain prospects in the external environment and the balance of payments situation.Publication Mongolia Quarterly Economic Update, April 2011(Washington, DC, 2011-04)Mongolia's prospects in the medium term look excellent from a growth perspective as well as a fiscal management perspective. Staying the course in the medium term means implementing the landmark Fiscal Stability Law (FSL) passed last year, and adopting a supportive integrated budget law this spring session of parliament. The economy grew 6.1 percent year-on-year (yoy) in 2010, following a contraction of 1.3 percent in 2009. The last quarter of 2010 ended with a broad-based recovery, supported by transportation, construction and wholesale and retail trade. The latest survey conducted in informal labor markets in March 2011 revealed no changes in the total number of casual workers compared to December. Mongolia has promising growth prospects. It has the opportunity now to exercise prudent fiscal and macroeconomic policies so it can steer clear of the mistakes made by other resource rich economies and achieve its potential.Publication Ethiopia Economic Update, November 2012(World Bank, Washington, DC, 2012-11)Since 2004 (Ethiopian Fiscal Year (EFY) 1997), Ethiopia has experienced strong and generally broad-based real economic growth of around 10.6 percent on average between then and 2011. Growth over the last nine years was far beyond the growth rates recorded in aggregate terms for Sub-Saharan Africa (SSA), which on average only reached 5.2 percent, less than half of Ethiopia's average real gross domestic product (GDP) growth rate during that period. Inspired by the East Asian experiences for a comparison of selected indicators and policies of Ethiopia and China/Korea), growth was induced through a mix of factors including agricultural modernization, the development of new export sectors, strong global commodity demand, and government-led development investments. The initial double digits growth rates have now manifested slightly lower but remain at high single-digit levels. The economy is expected to stabilize at around seven to eight percent in 2012, largely owing to improved performance in the agriculture sector. GDP growth is likely to stay around that margin up until 2016 (EFY 2008) driven by rising foreign investment and exports (Economist Intelligence Unit 2012). High inflation persists, but is on a slightly decreasing trend. Economic growth brought with it positive trends in reducing poverty, in both urban and rural areas. Ethiopia follows a strategy of increasing exports to facilitate growth. This is appropriate given the currently limited size of its domestic market and it is consistent with the development experience of some of the recently successful countries, particularly in East Asia. Export of goods growth is to a good extent driven by volume growth across a variety of product groups, which indicates that this growth is a result of recent efforts to increase and diversify the export base. Overall export and import developments result in a significantly increased trade deficit by 43 percent, up from US$5.5 billion in 2010/11 to US$7.9 billion.Publication East Asia and Pacific Economic Update, November 2009 : Transforming the Rebound into Recovery(World Bank, 2010)A vigorous economic rebound is under way in East Asia since the second quarter of 2009, following the sharp impact from the financial crisis and the global recession that began in late 2008. As much as the reduction in exports and industrial production across the region in the fourth quarter of 2008 and the first quarter of 2009 was unexpectedly swift and deep, so is the strength of the rebound, with doubts about green shoots dispelled in a matter of months and replaced by near-consensus views of a synchronized global rebound led by emerging East Asia. The robust rebound is due to a combination of timely and large fiscal and monetary stimulus in most countries in East Asia, notably in China, and a powerful process of inventory restocking that began after mid-2009. Globally, the advanced economies joined the rebound trend in the third quarter of 2009, and their contributions to global industrial production notably driven by inventory accumulation have begun to outpace the contribution from the East Asia region. These developments are set against a background of solid macroeconomic fundamentals, including high foreign exchange reserves, large private and corporate savings, and low corporate and government debt. The region's well-capitalized banks and much improved banking supervision since the 1997-98 Asian financial crisis have also helped limit financial contagion and the transmission of the forces of global recession.Publication Mongolia Quarterly Economic Update, June 2012(Washington, DC, 2012-06)The World Bank's Mongolia quarterly economic update assesses recent economic and social developments and policies in Mongolia. It also presents findings of ongoing World Bank activities in Mongolia. The Mongolian economy is continuing to grow at a very rapid pace, expanding by 16.7 percent year-on-year (yoy) in first quarter (Q1). This high growth however, is also fuelling inflation which touched 16 percent in April, well above the Bank of Mongolia's (BoM) inflation target of 10 percent. Increasing government spending on wages and salaries, large cash handouts to the general population, and burgeoning capital expenditures are adding to the demand pressures. Meanwhile, the worsening global economic outlook, in particular a faster than expected slowdown in China, Mongolia's largest trading partner, has negatively impacted export growth, resulting in deterioration in external balances. Under these circumstances, the advice to Mongolian policy-makers is to 'hold your horses' and adopt a more cautious macro-economic stance, tightening both monetary and fiscal policy to prevent further over-heating of the economy. The global economic outlook has deteriorated considerably in recent months. Financial conditions in high-income Europe, higher oil prices, and, most importantly, the slowing Chinese economy pose risks for Mongolia. The channels through which these operate include financial and trade linkages namely volatility in commodity prices and through demand from China for its mineral exports. Indeed, signs of these are already visible as demonstrated by the decline in exports in April. Other financial market linkages should also not be discounted: Mongolia's banking system, which has shown signs of overheating over the past year, is highly dollarized, with about a third of deposits denominated in dollars and easy convertibility out of the Mongolia Togrog. A sharp economic slowdown and/or an increased macroeconomic instability could expose the liquidity and asset quality vulnerabilities in individual banks and system overall.
Users also downloaded
Showing related downloaded files
Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication Services Unbound(Washington, DC: World Bank, 2024-12-09)Services are a new force for innovation, trade, and growth in East Asia and Pacific. The dramatic diffusion of digital technologies and partial policy reforms in services--from finance, communication, and transport to retail, health, and education--is transforming these economies. The result is higher productivity and changing jobs in the services sector, as well as in the manufacturing sectors that use these services. A region that has thrived through openness to trade and investment in manufacturing still maintains innovation-inhibiting barriers to entry and competition in key services sectors. 'Services Unbound: Digital Technologies and Policy Reform in East Asia and Pacific' makes the case for deeper domestic reforms and greater international cooperation to unleash a virtuous cycle of increased economic opportunity and enhanced human capacity that would power development in the region.Publication At Your Service?: The Promise of Services-led Growth in Uzbekistan(Washington, DC: World Bank, 2025-01-07)In Uzbekistan, the services sector accounts for more than half of all jobs and has been central to the process of structural transformation over the past three decades. In the past decade, the growth of Uzbekistan’s services exports has lagged behind its manufactures' exports while FDI greenfield announcements to both sectors have been even. The growth of the services sector in the past five years was driven by social services, mostly reflecting increased public spending. This report groups the services sector into four categories based on their skill intensity, the extent of their linkages with other sectors, and their tradability in international markets: low-skilled consumer services, low-skilled enabling services , global innovator services. Of these groups, social services accounted for three-fourths of employment growth in the services sector between 2017–2022. These services also experienced relatively high rates of labor productivity growth, which was largely driven by higher public spending on wages and salaries.Publication Poverty and Equity Assessment for El Salvador 2024(Washington, DC: World Bank, 2024-12-12)This report proposes an agenda for building on gains to re-accelerate poverty reduction among Salvadorans. The last World Bank Poverty Assessment for El Salvador, from 2015, proposed two key policy recommendations: (a) effective pro-poor spending and (b) reduction of crime and violence through better access to jobs and education. Nine years later, the authorities have managed to achieve a substantial reduction in crime and violence and have indicated an intent to build on such progress to establish a path toward an El Salvador where shared prosperity is achievable. In this report, we propose a three pillar structure to address poverty and inequality reduction: jobs, services, and social protection, with a cross-cutting set of primary conditions that articulates this structure.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.