Publication: Mongolia Quarterly Economic Update, June 2012
Loading...
Published
2012-06
ISSN
Date
2017-06-16
Author(s)
Editor(s)
Abstract
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.
Link to Data Set
Citation
“World Bank. 2012. Mongolia Quarterly Economic Update, June 2012. © World Bank. http://hdl.handle.net/10986/27241 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 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 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, October 2011(World Bank, Washington, DC, 2011-10)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).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 Mongolia Economic Update, April 2013(World Bank Group, Mongolia, 2013-04)In 2012, Mongolia's economy continued to experience a high growth rate of 12.3 percent. This growth rate was however lower than anticipated as Mongolia saw its coal exports drop significantly due to China's economic slowdown. Most noticeably, Mongolia had to finance a large fiscal deficit of 8.4 percent of gross domestic product (GDP), a record in the last 13 years. It is concerning that similar fiscal trends might continue in 2013 with the economy growing at a double-digit rate but also accumulating another large fiscal deficit. As Mongolia embarks on its largest infrastructure investments ever which can be in part financed through a first successful sovereign Chinggis bonds issuance- greater attention has to be paid: (i) to preparing those investments rigorously to ensure maximum socioeconomic return and avoid potential wastage of public resources; and (ii) to reflecting their financing transparently in the national budget.
Users also downloaded
Showing related downloaded files
Publication MIGA Annual Report 2013 : Insuring Investments, Ensuring Opportunities(Washington, DC: World Bank Group, 2013-10-11)In fiscal year 2013, Multilateral Investment Guarantee Agency (MIGA) issued 2.8 billion dollars in investment guarantees for projects in our developing member countries. At 1.5 billion dollars, representing more than half of new business, the bulk of MIGA's guarantees issued support investments in Sub-Saharan Africa. Sixty-nine percent of new business volume this year was in complex projects in infrastructure and extractive industries, a strategic priority for the Agency. This year, 82 percent of MIGA's new volume fell into one or more of strategic priority areas: investments in the world's poorest countries, "South-South" investments, investments in conflict-affected countries, and investments in complex projects. MIGA also established the conflict-affected and fragile economies facility to further deepen support to this priority area.Publication The Role of Social Ties in Factor Allocation(Published by Oxford University Press on behalf of the World Bank, 2019-10)We investigate whether social structure helps or hinders factor allocation using unusually rich data from the Gambia. Evidence indicates that land available for cultivation is allocated unequally across households; and that factor transfers are more common between neighbors, co-ethnics, and kinship-related households. Does this lead to the conclusion that land inequality is due to flows of land between households being impeded by social divisions? To answer this question, a novel methodology that approaches exhaustive data on dyadic flows from an aggregate point of view is introduced. Land transfers lead to a more equal distribution of land and to more comparable factor ratios across households in general. But equalizing transfers of land are not more likely within ethnic or kinship groups. In conclusion, ethnic and kinship divisions do not hinder land and labor transfers in a way that contributes to aggregate factor inequality. Labor transfers do not equilibrate factor ratios across households. But it cannot be ruled out that they serve a beneficial role, for example, to deal with unanticipated health shocks.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 Economy Profile of Djibouti(World Bank, Washington, DC, 2018-10-31)Sixteenth in a series of annual reports comparing business regulation in 190 economies, Doing Business 2019 covers 11 areas of business regulation. Ten of these areas - starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency - are included in the ease of doing business score and ease of doing business ranking. Doing Business also measures features of labor market regulation, which is not included in these two measures. Doing Business provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. This economy profile presents indicators for Djibouti; for 2019 Djibouti ranks 99.Publication Impact of Migration on Economic and Social Development : A Review of Evidence and Emerging Issues(2011-02-01)This paper provides a review of the literature on the development impact of migration and remittances on origin countries and on destination countries in the South. International migration is an ever-growing phenomenon that has important development implications for both sending and receiving countries. For a sending country, migration and the resulting remittances lead to increased incomes and poverty reduction, and improved health and educational outcomes, and promote economic development. Yet these gains might come at substantial social costs to the migrants and their families. Since many developing countries are also large recipients of international migrants, they face challenges of integration of immigrants, job competition between migrant and native workers, and fiscal costs associated with provision of social services to the migrants. This paper also summarizes incipient discussions on the impacts of migration on climate change, democratic values, demographics, national identity, and security. In conclusion, the paper highlights a few policy recommendations calling for better integration of migration in development policies in the South and the North, improving data collection on migration and remittance flows, leveraging remittances for improving access to finance of recipient households and countries, improving recruitment mechanisms, and facilitating international labor mobility through safe and legal channels.