2010年-世界发展银行全球_Mongolia_Quarterly_Economic_Update_July_2010_26页_1mb

Mongolia Quarterly Economic Update Summary (July 2010)

Core Content

This report outlines the economic developments and policy changes in Mongolia during the second quarter of 2010, with a focus on fiscal policy, inflation, external sector dynamics, and the banking sector. It also highlights the macroeconomic implications of the government's spending plans and the risks associated with the current economic environment.

Main Points

Fiscal Developments

• Fiscal Balance Stagnation: The trend of improving fiscal balances has stalled due to increased government expenditures, which have risen in line with mineral-related revenues.
• Budget Amendments: The 2010 budget was amended to increase spending by 4.5% of GDP, with the Mid-Term Budget Framework (MTBF) projecting a further 12.1% increase in 2011.
• Spending Drivers: The main drivers of increased spending include cash and non-cash transfers to citizens (MNT 1.5 million per person), wage increases, and capital expenditures.
• Fiscal Deficit: The fiscal deficit is expected to rise from 5% of GDP in 2010 to 6.4% and potentially to 51% of GDP in 2011 under the MTBF.
• Fiscal Stability Law: The adoption of the Fiscal Stability Law is crucial for managing fiscal spending and ensuring long-term sustainability, especially with expected large inflows from the Oyu Tolgoi (OT) mine from 2016 onwards.

Inflation

• Inflation Trends: Inflation has been on an upward trajectory, reaching 11.7% in May 2010, up from around 2% in December 2009.
• Drivers of Inflation: Both supply-side and demand-side factors are contributing to inflation. Supply-side issues include rising meat prices due to the dzud and higher electricity prices. Demand-side factors include the recovery of the economy and the February and planned cash transfers.
• Government Projections: The government estimates that inflation could reach over 20% by the end of the year, driven by the 30% increase in public sector wages and the MNT 120,000 cash distribution.
• Core Inflation: Core inflation has been rising, accounting for roughly half of headline inflation, indicating persistent demand-side pressures.

External Sector

• Trade Deficit Stabilization: The trade deficit has stabilized, decreasing to US$221 million in May 2010 from US$1082 million in March 2009.
• Export Performance: Mongolia's exports have continued to recover, supported by rising metal prices and increased Chinese imports of copper and coal.
• Import Growth: Imports have grown significantly, with the dollar value of goods imports increasing by 45% year-on-year in May 2010.
• Commodity Price Concerns: There are concerns that commodity prices may decline further, especially if the global recovery falters due to the European sovereign debt crisis.
• Gold Exports: Gold exports remain depressed despite record high prices, influenced by investor concerns and the metal's role as an inflation hedge.

Banking Sector

• Lending Growth: Total lending growth is picking up in nominal terms, with commercial banks contributing MNT 12.4 billion in retained profits to their capital in May.
• Non-Performing Loans (NPLs): NPLs remain at 15% of total loans, with the highest ratios in the construction sector.
• Bank Restructuring: A bank restructuring strategy has been drafted by the Bank of Mongolia, aiming to prepare the sector for the upcoming mining boom and reduce the risks of future bank failures.
• Interest Rates: Real economy-wide interest rates have been trending downwards, with the Bank of Mongolia raising its benchmark rate by 100 basis points to 11% in May.

Key Information

• Government Spending: The government plans to distribute MNT 1.5 million (around US$1000) to each citizen through cash and non-cash transfers, with the Human Development Fund (HDF) as the main vehicle.
• Fiscal Policy Risks: The return to pro-cyclical fiscal policy risks a resurgence of macroeconomic instability and high inflation, potentially leading to a boom-bust cycle.
• Capital Flows: Emerging market bond issuance has declined sharply, especially in May, due to global financial market volatility and concerns over sovereign debt in the Euro area.
• Exchange Rate and Reserves: The exchange rate remains stable, and foreign exchange reserves are near record levels, indicating resilience in the foreign exchange market.
• Investment and Employment: The government's spending plans are expected to boost investment and employment, but there is a risk of crowding out private sector activity and increasing inflationary pressures.

Conclusion

Mongolia's economic recovery is being supported by rising commodity prices and increased government spending, but this comes with significant risks. The return to pro-cyclical fiscal policy, combined with the potential for high inflation and the challenges in financing increased expenditures, could lead to a resurgence of macroeconomic instability. The adoption of the Fiscal Stability Law and careful management of monetary and fiscal policies are essential to mitigate these risks and ensure sustainable economic growth.