Publication: Mongolia Economic Update, November 2013
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2013-11
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2014-01-28
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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.
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“Shiilegmaa, Altantsetseg; Gombosuren, Khandtsooj; Batsuuri, Davaadalai. 2013. Mongolia Economic Update, November 2013. © World Bank. http://hdl.handle.net/10986/16643 License: CC BY 3.0 IGO.”
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