2012年-世界发展银行全球_Mongolia_Quarterly_Economic_Update_June_2012_28页_2mb

Mongolia Quarterly Economic Update Summary

Core Content

The World Bank's Mongolia Quarterly Economic Update provides an analysis of recent economic and social developments, as well as ongoing World Bank activities in the country. The report highlights the rapid economic growth, rising inflation, and the challenges posed by external sector developments and banking sector dynamics. It also outlines key policy recommendations for Mongolian authorities to address internal imbalances and manage risks from global economic conditions.

Main Points

Economic Growth

• Growth Rate: The Mongolian economy grew by 16.7% year-on-year (yoy) in Q1 2012, making it one of the fastest-growing economies globally.
• Sector Contributions:
  • Service sectors led growth, with wholesale and retail trade expanding by 51% yoy and transport growing by 11.7% yoy.
  • Mining sector contributed 1.6 percentage points to GDP growth.
  • Agriculture sector finally recovered from the dzud (severe weather conditions) of 2009-2010, growing by 13.6% in Q1 2012.

Inflation

• Inflation Rate: Inflation reached 16% in April, exceeding the Bank of Mongolia's (BoM) target of 10%.
• Drivers:
  • Demand-side pressures from increased government spending.
  • Sharp rise in food prices, particularly meat, which constitutes nearly a third of the food CPI basket.
  • Inflation is a major concern for the poor, who spend 49% of their income on food.

Government Spending and Fiscal Deficit

• Spending Growth: Government spending rose by 32% yoy in April, with capital spending growing by over 100%.
• Revenue Growth: Revenue growth remained stagnant, rising only 21% yoy.
• Fiscal Deficit: The fiscal deficit reached 4.7% of GDP in March, its highest level in nearly two years, and is expected to remain a challenge in 2013.

External Sector

• Trade Deficit: The trade deficit widened in April, reaching nearly US$2.1 billion on a 12-month rolling sum basis.
• Export Trends:
  • Exports fell by 2.8% yoy in April, marking the first decline in over two years.
  • Coal exports, Mongolia's largest export earner, showed minimal growth.
  • Copper exports declined for the fourth consecutive month.
• FDI and Reserves:
  • FDI inflows reached a record US$4.4 billion, financing the current account deficit.
  • FX reserves remained high, with the BoM accumulating US$440 million in April.

Exchange Rate and Bond Issuance

• Exchange Rate:
  • The Togrog appreciated by 6% in nominal terms and 11% in real terms in Q1.
  • This appreciation threatens the competitiveness of non-mineral traded sectors.
• Bond Issuance:
  • Mongolia successfully issued its first international bond offering in March, raising US$580 million at favorable yields.
  • The DBM's bond issuance was backed by a full sovereign guarantee and helped finance infrastructure projects.

Banking Sector Developments

• Deposit Inflows:
  • Both domestic and foreign currency deposit inflows are tapering off.
  • Local currency deposit rates rose from 10.7% to 11% in April, while FX deposit rates increased from 4.7% to 5.6%.
• Lending Growth:
  • Lending growth slowed to 50% yoy in April from 75% in November.
  • Real lending rates are barely positive at 0.6%, while real deposit rates are sharply negative at -6.7%.
• Credit Concentration:
  • Credit growth is decelerating and remains highly concentrated.
  • Non-performing loans (NPLs) are the highest in the region, and Tier 1 buffer capital ratios are among the lowest.

Policy Recommendations

• Macro-economic Stance: Mongolian policymakers are advised to adopt a more cautious macro-economic stance, tightening both monetary and fiscal policy to prevent further overheating.
• Fiscal Restraint: Given the structural deficit of 6.1% of GDP in April, Mongolia needs to undertake substantial fiscal tightening in 2013 to meet the target.
• Monetary Policy: The BoM's recent rate hikes are helping to curb bank lending, which had been growing over 60% at the start of the year.
• Infrastructure Financing:
  • The DBM's alternative financing methods, such as build-transfer schemes, pose significant fiscal liabilities.
  • The monetization of Erdenes TT shares could increase budgetary claims.

Key Information

• GDP Growth: 16.7% in Q1 2012.
• Inflation: 16% in April, with food prices rising sharply.
• Trade Deficit: Reached nearly US$2.1 billion in March 2012.
• FDI Inflows: Reached a record US$4.4 billion, financing the current account deficit.
• FX Reserves: Remained high at US$2.63 billion in April 2012.
• Bond Issuance: DBM's first international bond offering raised US$580 million.
• Poverty Headcount: Declined from 39.2% in 2010 to 29.8% in 2011.
• Construction Sector: Has weakened due to capacity constraints, including skilled labor shortages and material supply issues.
• Exchange Rate: Appreciated by 6% in nominal terms and 11% in real terms in Q1.
• Fiscal Deficit: Reached 4.7% of GDP in March, with a structural deficit of 6.1% of GDP in April.

Economic Outlook

• Global Risks:
  • A slowdown in China and worsening conditions in the Eurozone could negatively impact Mongolia's mineral exports and revenues.
  • Commodity prices are expected to remain volatile, reducing export earnings.
• Domestic Challenges:
  • The economy is facing internal imbalances, including overheating in the banking sector and excessive government spending.
  • The DBM's debt service payments and potential monetization of shares could constrain fiscal space.
• Recommendations:
  • Maintain a cautious approach to international bond issuance.
  • Ensure that funds raised are used for high-return projects.
  • Save more in the Fiscal Stability Fund and ensure prudent use of public funds.

Conclusion

Mongolia's economy is experiencing rapid growth, but this is accompanied by rising inflation and external sector challenges. While the government's expansionary fiscal policy has driven growth, it has also created significant fiscal imbalances. The appreciation of the Togrog and the slowing global demand for commodities, especially from China, threaten the competitiveness of non-mineral traded sectors. The report urges policymakers to adopt a more cautious macro-economic stance, tighten fiscal and monetary policies, and ensure that infrastructure and social projects are well-targeted and yield high returns.