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- BREAKING NEWS -
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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