2008年-世界发展银行全球_Mongolia_Quarterly_October_2008_18页_876kb

Mongolia Quarterly - October 2008 Summary

Core Content

The Mongolia Quarterly (October 2008) provides an overview of the country's economic and social developments, focusing on the impacts of the global financial crisis on Mongolia's macroeconomic stability. It highlights the challenges faced by the government in managing inflation, fiscal policy, and the balance of payments, while also discussing the effects on employment and the energy sector.

Main Economic Developments

Economic Growth

• Real GDP growth accelerated to 11.3% over the last 12 months in the second quarter of 2008.
• Services and agriculture were the main contributors, adding 4.2 and 3.8 percentage points to GDP growth.
• Industrial output saw a decline, with real gross industrial output increasing by only 2.3% yoy as of July 2008, and mining production declining by 1.9% in real terms.

Balance of Payments

• Exports increased by 47% in the first 8 months of 2008, driven by high world prices of copper and gold.
• Imports expanded by 90% yoy as of September 2008, primarily due to petroleum and equipment purchases.
• The capital account remained strong, with FDI reaching $195 million in the second quarter, up from $52 million yoy.
• Net foreign assets declined by $150 million over two months due to the sale of foreign reserves.

Inflation

• Inflation accelerated over the summer, reaching 34.2% yoy in August 2008, then declined to 31.7% in September.
• Non-food inflation was the main driver, contributing 14.5 percentage points to the overall inflation rate.
• Fuel and education fees were raised significantly, adding to inflationary pressures.
• Energy tariffs increased by 28% for coal and 39% for heating, leading to higher domestic prices.
• Wages and salaries more than doubled in two years, contributing to inflation expectations.

Monetary and Financial Conditions

• Monetary growth slowed to 17.3% yoy by the end of August 2008, down from 50% in early 2008.
• Credit growth also decelerated, with the Bank of Mongolia (BOM) tightening monetary policy and appreciating the Togrog against the dollar.
• Real appreciation of the Togrog by 24% since 2006 contributed to higher domestic inflation.
• Non-performing loans increased by 16% yoy, but the NPL ratio remained below 2.8% due to credit growth.

Fiscal Policy

• The government budget recorded a deficit of 3.1 billion Togrog as of September 2008.
• Domestic investment expenditures fell short of planned amounts by over 54% due to execution challenges.
• The 2009 budget is being revised to restrain spending and mitigate inflationary pressures, with a focus on fiscal tightening.
• Public wages and universal transfers will not be increased, and the investment program will be prioritized based on the economy's absorptive capacity.
• Fiscal space will be reserved for a targeted social safety net to protect the most vulnerable groups.

Employment

• Job creation slowed, with a 2.4% yoy decrease in July 2008.
• Industrial employment declined by 3.2% yoy at end-August, with metal ores mining and fur manufacturing being the main sectors affected.

Key Findings

• Inflation is domestically induced, as evidenced by the faster increase in domestic prices compared to international prices for imported goods.
• Public attitudes toward inflation are concerned, with 92% of households reporting that recent price increases affect their budgets.
• Fuel traders are benefiting from price disparities and the lack of access to energy for the poorest.
• Second-round effects of inflation are evident, with wage increases leading to further inflationary pressures.
• Credit growth is concentrated in a few banks, primarily in services and construction.

Special Focus: 2009 Budget

• The 2009 budget aims to restrain spending and reduce inflationary impact.
• Amendments to the 2008 budget reflect the new economic conditions brought by the global financial crisis.
• The investment budget underperformed significantly, with domestic investment falling short by 46% yoy.

Conclusion

The financial crisis and falling copper prices have led to slower economic growth, higher inflation, and reduced FDI. The government faces the challenge of maintaining growth while lowering inflation, which requires fiscal tightening and careful management of monetary policy. The domestic factors driving inflation, such as wage increases and energy pricing, need to be addressed to prevent a wage-price spiral. Social safety nets and targeted transfers will be necessary to support the most vulnerable populations.