2013年-世界发展银行全球_Mongolia_Economic_Update_April_2013_31页_1mb

Mongolia Economic Update Summary - April 2013

Core Content

This Economic Update provides an analysis of Mongolia's recent economic developments and outlook for 2013. It highlights key trends in the real, fiscal, external, and monetary sectors, while also addressing the challenges associated with the management of mineral revenues and the overall sustainability of economic growth.

Main Views and Key Information

Economic Development and Prospects

• Growth Trends: Mongolia's economy grew at a double-digit rate in 2012, with a growth of 12.3 percent, down from 17.5 percent in 2011.
• Drivers of Growth: The non-mineral sector, particularly agriculture, construction, and transportation, contributed significantly to the growth. The agricultural sector expanded by 21.3 percent, supported by livestock recovery and favorable weather conditions.
• Mining Sector: Despite a contraction in coal production, the mining sector still grew by 8.9 percent in 2012. The Oyu Tolgoi (OT) mine is expected to significantly boost mineral output in 2013, with copper and gold production likely to increase starting in the second quarter.
• World Bank Forecast: The World Bank revised its 2013 growth forecast to 13 percent, still among the highest globally, but the outlook remains volatile due to uncertainty in key growth factors such as FDI inflows, coal exports, and the timing of OT production.

Real Sector Development and Outlook

• Industrial Production: Slowed in 2013 due to weak coal production, though manufacturing showed strong performance.
• Consumption and Investment: Double-digit growth was driven by both consumption and investment. However, investment growth decelerated, and the trade deficit constrained further expansion.
• Sector Contributions: The agricultural and construction sectors were the main contributors to GDP growth in 2012, while the mining sector's share of GDP remained moderate at 15.7 percent.

Inflation

• Inflation Trends: Inflation slowed significantly in 2013, dropping to single digits in March (9.8 percent yoy), after reaching double digits in 2012.
• Food Inflation: Food inflation was the main driver of high inflation in 2012, decreasing to 9.5 percent in March 2013.
• Meat Price Drivers: Meat price increases were a major factor in 2012 inflation, attributed to supply shortages caused by government cash handouts.
• Energy Inflation: Energy and fuel prices remained relatively stable in 2013, with a moderate increase of 5.8 percent in March. Prices were kept stable since December 2012.

Fiscal Developments and Outlook

• Fiscal Deficit: The fiscal deficit reached a record 8.4 percent of GDP in 2012, driven by underperformance in revenue and high recurrent spending.
• 2013 Fiscal Outlook: The structural fiscal deficit is expected to exceed 7 percent of GDP, even though the approved budget keeps it at 2 percent. The World Bank projects an overall budget deficit of 6 percent of GDP.
• Revenue Shortfalls: The 2013 budget revenue projections are overestimated by 15-20 percent, as the first quarter revenue growth was only 5.8 percent compared to the budget forecast of 47 percent.
• Off-Budget Financing: The use of Chinggis bond proceeds and the Price Stabilization Program (PSP) adds to the fiscal burden and is not yet fully accounted for in the budget.

External Sector

• Trade Balance: The trade deficit remained significant in 2013, driven by weak coal exports and increased import demand.
• FDI Inflows: FDI inflows declined sharply in 2012 (17 percent) and continued to slow in early 2013, posing a downside risk to economic growth.
• OT Mine Impact: The OT mine is expected to boost mineral exports, but delays in production could have adverse effects on the economy.

Monetary and Banking Sector

• Monetary Policy: The Bank of Mongolia adopted an accommodative monetary stance in early 2013, cutting the policy rate twice to 11.5 percent.
• Inflationary Pressure: The easing of monetary policy and continued fiscal expansion could lead to inflationary pressure, despite the slowdown in headline inflation.
• Banking System: A small group of large banks (Khan, TDB, Golomt, Khas Bank) dominated the banking sector, accounting for 75 percent of total loans in 2012. Close monitoring of the banking system remains critical.

Challenges Ahead

• Fiscal Sustainability: Continuous expansionary fiscal policy risks undermining the sustainability of economic growth. The Fiscal Stability Law (FSL) was introduced to smooth public spending, but its implementation remains weak.
• Mineral Revenue Management: The challenge lies in shifting from a "spending fast" to a "spending well" fiscal management approach. This requires a prudent fiscal framework and greater focus on the quality of public investment.
• Public Investment Risks: Rapid public investment, especially through Chinggis bond proceeds, may not be fully absorbed by the economy, risking inefficiency and inflation.
• Precautionary Saving: Given the volatile nature of mineral revenues, the government needs to build a savings framework to ensure fiscal resilience and support social welfare and development expenditure during downturns.

Key Economic Indicators

• Real GDP Growth: 12.3 percent in 2012, expected to slow but remain in double digits in 2013.
• Inflation: 9.8 percent in March 2013, down from double digits in 2012.
• Fiscal Deficit: 8.4 percent of GDP in 2012, expected to rise to 6-13 percent in 2013.
• FDI Inflows: Declined to USD 3.8 billion in 2012, with further slowdown in early 2013.
• Mineral Output: Coal production dropped by 7.7 percent in 2012, while crude oil and gold production increased.

Annex: Mining Sector Outlook

• OT Mine: Expected to significantly boost mineral output in 2013, with phase one production likely to start in the second quarter.
• Mineral Revenue Trends: Mineral revenue remained a key component of the economy, though its share of GDP has been moderately declining since 2009.
• Global Mining Trends: The global mining sector is experiencing increased demand and investment, which could benefit Mongolia if it aligns its policies accordingly.

Conclusion

Mongolia's economy is experiencing high growth but is also facing significant fiscal and structural challenges. The management of mineral revenues, particularly from the OT mine, and the sustainability of fiscal policy are critical for long-term economic stability. The implementation of the Fiscal Stability Law and the development of a more prudent fiscal framework are essential to avoid repeating the boom-bust cycle and to ensure that public investment is efficient and effective.