2011年-世界发展银行全球_Mongolia_Quarterly_Economic_Update_August_2011_25页_1mb

Mongolia Quarterly Economic Update Summary

Core Content

The World Bank's Mongolia Quarterly Economic Update provides an in-depth analysis of the country's economic and social developments in 2011, focusing on growth, inflation, fiscal policies, and the impact of global and regional factors. The report highlights the rapid economic expansion, improvements in poverty reduction, and challenges posed by inflation and fiscal sustainability.

Main Economic Developments

• Economic Growth: Mongolia experienced a sharp expansion in GDP in the first two quarters of 2011, with Q2 GDP growth reaching 17.3% year-on-year. Key contributors were the transportation (39.9%), construction (38.4%), and retail and wholesale trade (24.7%) sectors.
• Sector Performance:
  • The mining and manufacturing sectors recorded respectable growth of 8.3% and 12.9% yoy in Q2, respectively.
  • Industrial production growth slowed to 6% in July after double-digit growth since July 2010.
  • The agriculture sector contracted by 17% yoy in 2010 due to the dzud (severe winter) impact.

Labor Markets and Poverty

• Unemployment Decline: Unemployment dropped from 13% in December 2010 to 8.7% in June 2011, with the formal unemployment rate increasing slightly to 3.6% in July.
• Informal Labor Markets: Real wages in informal markets nearly doubled between December 2010 and June 2011, with casual workers increasing by 40% in July 2011.
• Poverty Reduction:
  • Poverty declined significantly from 61.1% in 2002/3 to 35.2% in 2007/8.
  • Rural poverty fell from 69.7% to 46.6%, and urban poverty from 54.1% to 26.9%.
  • Livestock numbers increased, especially among the poorest households, contributing to poverty reduction.
  • Despite progress, 21% of those surveyed still reported that their earnings do not meet basic needs, although this number dropped by 20% from March.

Inflation Trends

• Consumer Price Inflation: Increased to 11.4% yoy in July 2011, up from 5.5% in June.
• Core Inflation: Rose by 13.7% yoy, excluding volatile energy and food prices.
• Food Price Increases: Resurgence in food prices after the effects of government meat reserves wore off, with meat prices up 34% yoy in July and mutton prices up 5%.
• Global Impact: Mongolia's food inflation lags behind China's by about 3 months. China's food prices rose by 15% yoy, particularly in meat and poultry, contributing to inflation in Mongolia.
• Fuel Crisis: Mongolia faced a severe fuel shortage, with gas stations imposing 30-liter gasoline limits and several petroleum products running out. This affected key sectors like mining, agriculture, and construction.
• Fuel Pricing Policies: Mongolia's neighbors—China, Russia, and Kazakhstan—imposed export bans or duties to protect domestic prices, which often led to fuel shortages. Mongolia's domestic prices were also relatively low due to high transport costs and landlocked status.

Fiscal Developments

• Fiscal Surplus: On a 12-month rolling basis, the fiscal surplus reached 2.7% of GDP in July 2011, compared to a 2.3% deficit in July 2010.
• Revenue Growth: Annual revenues and grants increased by 55% in nominal terms and 46% in real terms in July 2011, driven by royalties (70% yoy), customs duties (79% yoy), and VAT (83% yoy).
• Expenditure Trends: Total expenditures increased by 27% yoy, with capital expenditures up 57% and current transfers up 48% due to cash handouts from the Human Development Fund (HDF).
• HDF Challenges: The HDF is used to distribute cash to citizens and support tuition fees. However, prepayments from mining projects have not materialized, forcing the Erdenes MGL to borrow MNT 25 billion from commercial banks.
• Fiscal Stability Law (FSL): The FSL, passed in 2010, aims to insulate the budget from volatile mineral prices. It includes a stabilization fund to collect excess revenues, but its structural balance of -2% of GDP only takes effect in 2013, raising concerns about implementation, especially with elections in 2012.

External Sector and Banking

• Trade Deficit: Widened to US$ 1.349 billion in July 2011, driven by machinery and equipment imports.
• Export Performance: Coal became the largest export, accounting for 38% of total exports, with 42% yoy growth in crude oil exports in June. Copper exports declined, and gold and greasy cashmere also underperformed.
• Commodity Prices: Continued to rebound, with coal and copper prices rising.
• Banking Sector:
  • Credit Growth: Outstanding loans increased by 46% yoy in July 2011.
  • Non-Performing Loans (NPLs): NPL volume rose by 9% in July since January, with a 10% ratio to total outstanding loans.
  • Interest Rates: Real interest rates on local currency deposits were negative, while US$ deposit rates were high by international standards, raising concerns about liquidity issues.

Economic Outlook

• Dependence on Global Factors: Mongolia's economy is heavily influenced by global macroeconomic conditions. A global recession could have significant impacts, particularly if China does not react quickly to support demand for Mongolian minerals.
• Reform Agenda: Mongolia needs to continue its reform efforts to capitalize on its long-term growth potential and avoid the pitfalls of resource-rich economies, such as the Dutch Disease.
• Recommendations:
  • Maintain fiscal discipline to prevent inflation from undermining poverty reduction.
  • Ensure implementation of the FSL to sustain countercyclical policies.
  • Avoid loose monetary policy to control inflation.
  • Focus on sustainable fuel policies and consider the cost-effectiveness of building an oil refinery.
  • Address long-term structural issues in the economy to ensure continued progress.

Key Figures and Tables

• Figure 1: Mongolia's economy expanded by double-digit growth in Q2 2011.
• Figure 2: Manufacturing and mining sector growth slowed down.
• Figure 3: Registered unemployment increased slightly in July 2011.
• Figure 4 and 5: Poverty declined substantially, with livestock numbers increasing, especially among the poorest households.
• Figure 6-9: Inflation and food prices rose, with a notable lag in Mongolia compared to China.
• Figure 10-11: Fuel prices in neighboring countries were set at low levels, contributing to shortages.
• Figure 12-14: Fiscal balances improved, but public expenditures surged.
• Figure 15-19: Trade deficit widened, while international reserves reached record levels.
• Table 1: Fuel policies of Mongolia's neighbors.
• Table 2: Drivers of change among major export commodities.
• Table 3: Mongolia's key economic indicators.

Conclusion

The report underscores the positive economic growth and poverty reduction trends in Mongolia, but also highlights inflationary pressures, fiscal risks, and fuel shortages as major challenges. The implementation of the FSL and sustainable fiscal policies are crucial for maintaining economic stability and ensuring that the benefits of growth are equitably distributed. The external sector, particularly China's demand for minerals, plays a pivotal role in shaping Mongolia's economic future. The banking sector needs stronger prudential norms and buffer capital to manage NPLs and credit risks. Overall, the economic outlook is uncertain, and continued reform is essential to secure long-term growth and stability.