2013年-世界发展银行全球_Mongolia_Economic_Update_November_2013_49页_1mb

Mongolia Economic Update Summary - November 2013

Core Content

The November 2013 Mongolia Economic Update provides an analysis of recent economic developments and policy outlook in Mongolia, highlighting both positive growth trends and underlying risks to macroeconomic stability.

Main Points

Global and Regional Economic Developments and Outlook

• Advanced Economies Recovery: Recovery is gaining momentum in major advanced economies such as the Euro area, Japan, and the United States.
• Developing Economies Growth: Economic growth in developing economies in the region is expected to soften in 2013 due to declining global commodity prices and weakening demand.
• Global Growth Forecast: The global economy is projected to grow at 2.4% in 2013, slightly lower than 2012, and is expected to rise to 3.1% in 2014 and 3.4% in 2015.
• East Asia Growth: Developing East Asia is forecasted to grow at 7.1% in 2013 and 7.3% in 2014, with China expected to grow at 7.5% in 2013 and 7.7% in 2014.
• Headline Risks: A greater than expected slowdown in China could pose significant downside risks to the region's economic growth, especially for Mongolia and Lao PDR, which are most exposed to a slowdown in China.

Mongolian Economy – Recent Developments and Prospects

• Real Sector Growth: Mongolia is expected to maintain double-digit growth in 2013, driven by the start of copper production from the Oyu Tolgoi (OT) mine and expansionary fiscal and monetary policies.
• Growth Drivers: Strong performance in agriculture and construction has contributed to growth so far.
• Inflation Trends: Inflation has increased in recent months, reaching 9.9% year-on-year in September, due to rising food prices and a weak exchange rate.
• Fiscal Situation: Off-budget spending, particularly through the Development Bank of Mongolia (DBM), has increased significantly, contributing to a large fiscal deficit. The government has announced a fiscal consolidation plan, but off-budget spending remains a concern.
• Monetary and Banking Sector: Rapid credit growth, especially in construction and housing, has been supported by the Bank of Mongolia's easing monetary policies. However, this has led to increasing financial sector vulnerabilities, including a rising loan-to-deposit ratio and non-performing loans (NPLs).
• External Sector: Mongolia faces significant balance of payments pressures due to weak mineral exports, declining FDI inflows, and a large current account deficit. The economy is also vulnerable to exchange rate fluctuations and external shocks.

Overall Assessment and Policy Recommendations

• Sustainability Concerns: Current loose economic policies are not sustainable due to increasing balance of payments pressures and macroeconomic vulnerabilities.
• Policy Adjustments Needed: The government should shift from growth-oriented policies toward economic stability and rebuilding macroeconomic policy buffers.
• Fiscal Policy: Fiscal policy needs to be further tightened and should focus on "spending well" by aligning infrastructure spending with government capacity and economic absorptive ability. The off-budget spending should be integrated into the official budget under the Fiscal Stability Law (FSL).
• Monetary Policy: Monetary policy should be adjusted to ensure financial and economic stability. The rapid credit growth should be curbed, and policy lending programs should be phased out and implemented through the official budget.
• Banking Sector Regulation: Strengthening supervision and monitoring of the banking system is essential, especially in the construction and housing sectors. The prudential regulatory forbearance on policy loans should be terminated.
• Investment Climate: The new Investment Law aims to improve the investment climate and build confidence among investors. Continued improvements in investment-related regulations and consistent policy implementation are needed.

Key Economic Indicators

• GDP Growth: Mongolia is projected to grow at 12.5% in 2013 and 10.3% in 2014.
• Inflation: Headline inflation reached 9.9% in September 2013.
• Government Spending: Government spending is projected to reach over 47% of GDP in 2013.
• Public Debt: Public debt to GDP ratio reached 63% in 2012.
• Budget Deficit: The overall budget deficit, including off-budget spending, is expected to reach over 12% of GDP in 2013.
• Credit Growth: Private credit growth accelerated from 23.9% in January to 48% in September.
• Loan-to-Deposit Ratio: The loan-to-deposit ratio rose to 128% in September 2013.
• Current Account Deficit: Mongolia's current account deficit is over 30% of GDP, the highest among the region's resource exporters.
• Exchange Rate Volatility: The Mongolian Tögrög (MNT) has experienced volatile fluctuations since July 2013.

Policy Recommendations

• Tighten growth-oriented economic policies toward economic stability.
• Rebuild fiscal and monetary policy buffers to address potential external shocks.
• Integrate off-budget spending into the official budget under the FSL.
• Implement a proper medium-term public investment plan aligned with fiscal sustainability.
• Adjust monetary policy to ensure financial stability and curb rapid credit growth.
• Strengthen regulatory and supervisory frameworks for the banking sector.
• Improve the investment climate through consistent policy implementation and legal reforms.

Conclusion

Mongolia's economy is showing strong growth in 2013, primarily due to the expansion of the Oyu Tolgoi mine and expansionary policies. However, the country is exposed to significant risks, including balance of payments pressures, rising inflation, and financial sector vulnerabilities. The government needs to shift its focus from growth to stability and ensure transparency and efficiency in fiscal and monetary management to maintain long-term economic sustainability.