World Bank2017-06-162017-06-162012-06https://hdl.handle.net/10986/27241The 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.en-USCC BY 3.0 IGOABSORPTIVE CAPACITYACCOUNTINGACCUMULATION OF RESERVESADMINISTRATIVE COSTSARREARSASSET QUALITYBAILOUTSBALANCE OF PAYMENTSBALANCE SHEETBANK ASSETSBANK BALANCE SHEETSBANK LENDINGBANKING SECTORBANKING SYSTEMBASIS POINTSBASKET OF GOODSBENEFICIARIESBENEFICIARYBLACK MARKETBONDBOND ISSUANCEBONDSBORROWING COSTSBUDGETINGBUFFERBUFFERSCAPACITY BUILDINGCAPACITY CONSTRAINTSCAPITAL EXPENDITURESCAPITAL PROJECTSCASH FLOWCASH TRANSFERSCENTRAL BANKCENTRAL BANK BILLSCENTRAL BANKSCOMMERCIAL BANKSCOMMODITY PRICESCOMPETITIVENESSCONSUMER PRICE INDEXCONSUMPTION GROWTHCONTINGENT LIABILITIESCORE INFLATIONCORPORATE BONDCORPORATE BOND ISSUANCECORPORATE GOVERNANCECOST OF CAPITALCOUPONCREDIBILITYCREDIT GROWTHCREDITORSCURRENCY MARKETSCURRENT ACCOUNTCURRENT ACCOUNT DEFICITDEBTDEBT CRISISDEBT ISSUANCESDEBT SERVICEDEBT SERVICE PAYMENTSDEBT SUSTAINABILITYDEPOSITDEPOSITSDEVELOPING COUNTRIESDEVELOPMENT BANKDEVELOPMENT BANKINGDEVELOPMENT BANKSDISBURSEMENTDOMESTIC CAPITALDOMESTIC CAPITAL MARKETSDOMESTIC CREDITDOMESTIC DEMANDDOMESTIC GOODSDOMESTIC INFLATIONECONOMIC CONDITIONSECONOMIC GROWTHECONOMIC SLOWDOWNEMPLOYMENTENABLING ENVIRONMENTEQUIPMENTEXCESS DEMANDEXCHANGE RATEEXCHANGE RATE STABILITYEXCISE TAXESEXPENDITUREEXPENDITURESEXPORT EARNINGSEXPORT GROWTHEXPORT VOLUMESEXPORTERSEXPOSUREEXTERNAL BALANCESEXTERNAL DEBTEXTERNAL SHOCKSFINANCIAL MARKETFINANCIAL SYSTEMFISCAL BALANCEFISCAL DEFICITFISCAL DEFICITSFISCAL POLICIESFISCAL POLICYFOOD PRICESFOREIGN CURRENCYFOREIGN CURRENCY DEPOSITSFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN EXCHANGE RESERVESGLOBAL ECONOMYGLOBAL TRADEGOLDGOVERNMENT EXPENDITURESGOVERNMENT REVENUESGOVERNMENT SPENDINGGROSS DOMESTIC PRODUCTHIGH INFLATIONHIGH INFLATION EPISODEHOLDINGHOUSINGHUMAN CAPITALHUMAN DEVELOPMENTIMBALANCESIMPORTIMPORT GROWTHIMPORTSINCOME DISTRIBUTIONINCOME TAXINFLATIONINFLATION EXPECTATIONSINFLATION RATEINFLATION TARGETINFLATIONARY PRESSURESINFRASTRUCTURE DEVELOPMENTINFRASTRUCTURE FINANCINGINTEREST RATEINTEREST RATESINTERNATIONAL BONDINTERNATIONAL CAPITALINTERNATIONAL CAPITAL MARKETSINTERNATIONAL DEBTINTERNATIONAL DEBT MARKETSINTERNATIONAL FINANCIAL MARKETINTERNATIONAL FINANCIAL MARKETSINTERNATIONAL MARKETSINTERNATIONAL RESERVESINTERNATIONAL STANDARDINTERNATIONAL TRADEINVESTINGINVESTMENT BOOMINVESTMENT SPENDINGINVESTOR INTERESTIPOLABOR MARKETLABOR MARKETSLIQUIDITYLIVING STANDARDLOAN PORTFOLIOLOAN PORTFOLIOSLOAN RATELOCAL CURRENCYLONG-TERM ASSETSLOSS OF REVENUESMACROECONOMIC INSTABILITYMARKET FAILUREMARKET PRICESMATURITYMONETARY POLICYMORTGAGEMORTGAGE LOANSMORTGAGESNON-PERFORMING LOANNON-PERFORMING LOANSNPLOIL PRICESOUTSTANDING DEPOSITSOUTSTANDING STOCKOUTTURNPERSONAL INCOMEPORTFOLIOPORTFOLIO INFLOWSPOVERTY LEVELPOVERTY REDUCTIONPRIVATE CONSUMPTIONPRIVATE PLACEMENTPRIVATE SECTOR HOUSINGPUBLIC DEBTPUBLIC FINANCESPUBLIC HOUSINGPUBLIC INVESTMENTSPUBLIC POLICIESPUBLIC SECTOR DEBTPURCHASING POWERRAPID GROWTHRATES OF RETURNRATES OF RETURNSREAL EXCHANGE RATEREAL EXCHANGE RATESREAL SECTORREDEMPTIONREMITTANCESREPAYMENTREPAYMENTSRESERVERESERVE REQUIREMENTSRESERVESRETURNRISK MANAGEMENTSAFETY NETSAVINGSSHAREHOLDERSSLOWDOWNSMALL BORROWERSSOLVENCYSOVEREIGN DEBTSOVEREIGN GUARANTEESTOCK MARKETTAXTIER 1 CAPITALTIME DEPOSITSTOTAL EXPORTSTOTAL IMPORTSTRADE BALANCETRADE DATATRADE DEFICITTRADINGTRADING PARTNERTRADING PARTNERSTRANSPORTUNCERTAINTYURBAN DEVELOPMENTWAGESWEIGHTSWITHDRAWALReportWorld Bank10.1596/27241