Tuesday, November 10, 2015

[BREAKING: World Bank Lowers Mongolia's 2016 GDP Forecast to 0.8% from 4.1%, 2015 to 2.3% from 3.3%]

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Tuesday, November 10, 2015

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Mogi: wow, big downgrade in the space of just one month, previous forecast came out in October

World Bank Lowers Mongolia’s 2016 GDP Forecast to 0.8% from 4.1%, 2015 to 2.3% from 3.3%

Mongolia Economic Update - November 2015

November 10 (World Bank) --

Recent Economic Development

·         Sluggish domestic demand and weakening exports drag on growth.

·         Inflation moderates amid lower food price inflation and subdued domestic demand.

·         Steps were taken to restore fiscal sustainability in the medium term.

·         Fiscal policy became tighter amid large revenue shortfalls.

·         The supplementary budget for 2015 was adopted in early November and the draft 2016 budget is under discussion.

·         Public investment financed by the DBM became tighter.

·         Monetary conditions have tightened.

·         The banking sector remains under strain with tighter funding conditions and deteriorating asset quality.

·         Adjustment in the current account continues with import compression.

·         Large external financing mitigated the immediate balance of payments pressure, at the cost of higher external debt.

·         Exchange rate adjustment has been limited in recent months.

Economic Prospects and Challenges

·         Growth is expected to remain weak in 2015-16, but a recovery in foreign investment would begin to support the non-mining sector growth.

·         The fiscal outlook remains weak with the prospect of a slow revenue recovery.

·         The balance of payments prospects remain weak and the economy is vulnerable to shocks.

·         Meanwhile, substantial external downside risks lie ahead.

Policy Considerations

·         Macroeconomic policy needs to stay focused on restoring sound economic management.

·         Steps have been taken but further actions are needed.

·         Fiscal consolidation should continue and high caution is needed for further external financing.

·         Monetary policy should stay focused on maintaining price stability and reducing external vulnerability.

·         Exchange rate flexibility needs to be enhanced.

·         The safety buffers of the banking system need to be further strengthened.

·         Better targeting of the social welfare programs would help strengthen the social safety net in an economic downturn.

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