Publication: Mongolia Quarterly Economic Update, October 2011
Loading...
Published
2011-10
ISSN
Date
2017-06-13
Author(s)
Editor(s)
Abstract
The economic rebound in recent quarters has been stronger than expected and the economy is showing signs of overheating. These signs are show up in rising inflation, especially of those goods and services which are in strong demand, but cannot easily be imported or whose local supply cannot readily be increased to meet the growing demand. Gross Domestic Product (GDP) growth reached 20.8 percent year-on-year (yoy) in Q3, following an outturn of 17.3 percent in Q2. Growth for the year as a whole will likely hit 15 percent, if not more, up from 6.4 percent in 2010, and is being pushed by infrastructure spending as Mongolia develops its vast mineral wealth. Inflation continues its upward trend. The trade deficit is close to record levels (US$ 1.4 bn in September using 12-month rolling sums) driven by a surge in mining-related equipment and fuel imports. Exports are growing strongly too, driven by large coal shipments to China. The 2012 budget continues this fiscal expansion and targets a 74 percent increase in expenditures (mostly on wages and social transfers).
Link to Data Set
Citation
“World Bank. 2011. Mongolia Quarterly Economic Update, October 2011. © World Bank. http://hdl.handle.net/10986/27089 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Mongolia Quarterly Economic Update, August 2011(Washington, DC, 2011-08)The Mongolian economy is experiencing rapid growth in 2011 the second quarter saw the economy growing at a whopping 17.3 percent year on year, compared to 9.9 percent in the first quarter. Transportation and construction grew at 39.9 percent and 38.4 percent, respectively, while retail and wholesale trade grew at 24.7 percent, with Mongolians spending more on consumption as a result of higher incomes. The mining and manufacturing sectors recorded respectable growth rates of 8.3 and 12.9 percent yoy in the second quarter, respectively. Reflecting the higher growth, unemployment declined from 13 percent in December 2010 to 8.7 percent in June. Informal labor markets for unskilled workers are also booming, with real wages nearly doubling between December 2010 and June 2011. Mongolia's economic outlook depends heavily on global macroeconomic factors: the current uncertainty and poor growth prospects for the global economy are cause for concern. If there is another global recession, Mongolia's small, open economy will be affected. In that case, China's policy reaction will be crucial for Mongolia.Publication Taking Stock, December 2010(World Bank, Hanoi, 2010-12)In the post-global economic crisis environment, Vietnam's economy continues to grow at a reasonably rapid and stable rate. While the speed of global economic recovery has been uneven across the world, Asia as a region has done particularly well. And within Asia, Vietnam's growth performance continues to be impressive. As shown in left panel of, Vietnam was one of the fastest growing economies in the East Asia and Pacific (EAP) region prior to the global economic crisis and has remained so in the post-crisis period as well1. After registering a real gross domestic product (GDP) growth of 5.3 percent in 2009, Vietnam's economy is expected to grow between 6.5-6.7 percent in 2010. Vietnam, like China, stands out not only for achieving a higher average growth rate but also a more stable growth path. This however has meant that the speed with which the Vietnam's economy is bouncing back from the lows of 2009 appears to be less impressive than countries that experienced negative growth last year. This edition of 'Taking Stock' a semi-annual publication from the World Bank attempts to understand the recent macroeconomic changes in Vietnam. It documents changes to the macroeconomic outcomes and policies with a view to inform policy discussions in the country. The analysis is mostly retrospective in nature, though discussions on prospective challenges and outlook are also briefly mentioned. Developments in the global economy in general and in the EAP region in particular are juxtaposed against Vietnam's own economic outcomes and policies to provide a more complete and nuanced picture of the issues.Publication Taking Stock, June 2010(World Bank, Hanoi, 2010-06)Vietnam has navigated the global crisis better than many other countries. GDP grew by 5.3 percent in 2009, accelerating to 6.9 percent in the last quarter of the year. At 5.8 percent, the figure for the first quarter of 2010 was less impressive, but claims that growth has slowed down are most probably unwarranted. Exports declined in 2009, for the first time since the beginning of economic reforms, but their decline was smaller than in other countries of the region. By now export growth is converging back to the 30 percent annual growth rate observed before the crisis. Inflation, which had reached 19.9 percent in 2008, was down to 6.5 percent in 2009. While there were some worrying signs of inflation acceleration in late 2009 and early 2010, by now the monthly increase of the Consumer Price Index (CPI) is again moderate. And as in previous years, there were no banking crises despite the continuation of macroeconomic turbulence. More generally, lack of clarity by markets forces the government to overshoot in its policy reactions. Because markets are not sure to understand what the government is up to, they need to see very strong action in order to be convinced that the right course of action has been taken. As a result, Vietnam has had to go through dramatic shifts in the policy stance as circumstances changed. The stabilization policies of 2008 effectively 'killed' the real estate bubble and brought inflation rates to zero in just a few months, but such speed took a toll on economic activity. The stimulus policies of 2009 were equally strong and determined, but they ended up putting too much pressure on international reserves. With more information disclosure and better communication, policy shifts could perhaps be less extreme. Combined with stronger macroeconomic management, it should be possible for Vietnam to gradually free itself from the 'stop-and-go' cycle that has characterized macroeconomic policies over the last three years.Publication Mongolia Quarterly Economic Update, February 2012(Washington, DC, 2012-02)Gross Domestic Product (GDP) growth accelerated to an unprecedented 17.3 percent in 2011 from 6.4 percent in 2010 and the unemployment rate fell from 13 percent in 2010 to 9 percent in 2011. However, real wages for unskilled workers in the urban informal sector are starting to fall as the inflation rate reached 11.1 percent year-on-year in December. Sharply rising government spending is the root cause of overheating: government spending rose by 56 percent in 2011 and is budgeted to rise by a further 32 percent this year, fueled by sharply rising resource revenues. This pro-cyclical fiscal policy could result in another 'boom-and-bust' cycle Mongolia experienced before, particularly as the global economy could face a substantial slowdown in growth due to the continuing European sovereign debt crisis, and which could result in a sharp drop in mineral prices and subsequently government revenues There have been major legislative developments in 2011 and early 2012 aimed at strengthening policy institutions and frameworks. The Integrated Budget Law (IBL) was passed in December 2011: this organic budget law contains measures to support fiscal sustainability and the successful implementation of the Fiscal Stability Law. It also strengthens the public investment framework by requiring feasibility studies and alignment with national priorities for projects to be included in the Public Investment Program and the budget. The Social Welfare Law was passed in early January. This mandates the provision of a targeted poverty benefit replacing the existing system of universal cash transfers. To ensure macroeconomic stability and to prevent a hard landing for the economy in case of an adverse external shock, Mongolia needs to adhere strictly to prudent fiscal policies as set out in the FSL and IBL and tightening both fiscal and monetary policy to reduce inflation, take macro-prudential action to reduce systemic risks in the banking sector and maintain a flexible exchange rate that will act as the first buffer in any external shock materializes. These are uncertain times for Mongolia. The economy faces growing headwinds from the global economic environment, while the looming elections increase domestic uncertainty. Until a substantial amount of savings has accumulated in the stabilization fund, Mongolia remains strongly exposed to volatility in commodity prices.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 Democracy, Market Economics and Development : An Asian Perspective(Washington, DC: World Bank, 2001-05)The book contains a selection of papers presented at the Conference on Democracy, Market Economy, and Development, whose objective was to examine the extent of which democracy is important to the achievement of sustainable development. While it is widely accepted that economic freedom, as ensured broadly by the operation of the economy according to market, or laissez-faire principles, is a critical determinant of development, the role of political freedom, as ensured broadly by the practice of democracy, is less well understood. The papers focus largely on the experience of East Asia in recent years, featuring: democracy and the market economy, emphasizing both politics, and economics as essential to improve the lives of citizens; democracy and social justice, as intrinsic to development, arguing that rights and liberties are best conveyed by the democratic system of governance; participation, as fundamental to democracy and development, for it is the practice of democracy that is most critical to the long-term sustainability of development; liberal participatory democracy, as instrumental to prod sustainable economic reforms, by ensuring the legitimacy of reform efforts. Notably, the preconditions that participatory democracy requires in order to fully support reforms, are discussed, with supporting evidence from experiences in Latin America, and Asia; and, political and economic institutions of Asia, and the West, as set to converge, despite inconclusive debates on Asian values.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Democratic Jihad? Military Intervention and Democracy(World Bank, Washington, DC, 2007-06)Democracies rarely if ever fight one another, but they participate in wars as frequently as autocracies. They tend to win the wars in which they participate. Democracies frequently build large alliances in wartime, but not only with other democracies. From time to time democracies intervene militarily in ongoing conflicts. The democratic peace may contribute to a normative justification for such interventions, for the purpose of promoting democracy and eventually for the promotion of peace. This is reinforced by an emerging norm of humanitarian intervention. Democracies may have a motivation to intervene in non-democracies, even in the absence of ongoing conflict, for the purpose of regime change. The recent Iraq War may be interpreted in this perspective. A strong version of this type of foreign policy may be interpreted as a democratic crusade. The paper examines the normative and theoretical foundations of democratic interventionism. An empirical investigation of interventions in the period 1960-96 indicates that democracies intervene quite frequently, but rarely against other democracies. In the short term, democratic intervention appears to be successfully promoting democratization, but the target states tend to end up among the unstable semi-democracies. The most widely publicized recent interventions are targeted on poor or resource-dependent countries in non-democratic neighborhoods. Previous research has found these characteristics to reduce the prospects for stable democracy. Thus, forced democratization is unpredictable with regard to achieving long-term democracy and potentially harmful with regard to securing peace. But short-term military successes may stimulate more interventions until the negative consequences become more visible.Publication World Development Report 2012(World Bank, 2012)The main message of this year's World development report: gender equality and development is that these patterns of progress and persistence in gender equality matter, both for development outcomes and policy making. They matter because gender equality is a core development objective in its own right. But greater gender equality is also smart economics, enhancing productivity and improving other development outcomes, including prospects for the next generation and for the quality of societal policies and institutions. Economic development is not enough to shrink all gender disparities-corrective policies that focus on persisting gender gaps are essential. This report points to four priority areas for policy going forward. First, reducing gender gaps in human capital-specifically those that address female mortality and education. Second, closing gender gaps in access to economic opportunities, earnings, and productivity. Third, shrinking gender differences in voice and agency within society. Fourth, limiting the reproduction of gender inequality across generations. These are all areas where higher incomes by themselves do little to reduce gender gaps, but focused policies can have a real impact. Gender equality is at the heart of development. It's the right development objective, and it's smart economic policy. The World development report 2012 can help both countries and international partners think through and integrate a focus on gender equality into development policy making and programming.Publication Disease and Mortality in Sub-Saharan Africa, Second Edition(Washington, DC: World Bank, 2006)Since the publication of the first edition of "Disease and Mortality in Sub-Saharan Africa" (report no. 9784 (1991)), many new sources of health and demographic information have become available, including data on trends in HIV infection from antenatal clinic surveillance sites, the first set of African life tables from a growing number of demographic surveillance sites, injury statistics from a small number of injury mortality surveillance registers, and cancer data from cancer registers. Improved methods for estimating the incidence of several other diseases, including tuberculosis, maternal mortality, and chronic diseases, have also improved the reliability of health statistics. Verbal autopsy studies have linked with demographic surveillance sites, adding to our knowledge on changes in the cause-of-death composition in several countries. Notwithstanding these advances in health statistics, a theme that emerges from all the chapters in this volume is that too little is known about trends in the diseases and conditions included here in order to monitor and evaluate the effectiveness of programs intended to produce better health outcomes. As we get closer to the 2015 end point of the Millennium Development Goals, reaching the goals will become increasingly challenging. The continued improvement of disease surveillance and other regularly published health information remains as important a priority for African health systems as it was for the first edition.