Is Mongolia’s Fragile Economy Prone to Crisis?
Economic stagnation has already begun in Mongolia. The main reason for this is due to the decrease in price of coal, which makes up 35 percent of the total of Mongolia’a exports. Mongolia is losing 15-20 USD from each ton of exported coal. Participants in the meeting stressed this point. But the deputy Minister of Finance Ch.Gankhuyag explained, “whether an economic crisis will occur or not is not definite.”
He further stated, “If you keep saying something will happen, it is sure to happen. I don’t want it to happen. Trust and confidence is the major base for the economy. Investors decide based on their confidence in information. Hence if you keep acting as if the economy has collapsed, this in itself will spark it. ‘It might occur, and how can we prevent it’ is what economists should be focusing on. For instance, if a rumour that USD is about to increase in value is spread, everyone will start buying it therefore increasing its value and vice versa. Due to its fragile nature, economic issues must be dealt with an extra degree of diligence and carefulness,” concluded Ch.Gankhuyag.
Many officials and experts expressed their opinions on this matter. The Ambassador and international economic analyst, D.Davaasambuu, gave a seminar titled, “Opportunities for decreasing the negative effects of the world economics to Mongolia.”
It has been said at the seminar that to prevent an economic crisis, Mongolia must change its consumer policy by lowering policy interest to five-six percent; strengthen the security placed on transactions and saving accounts; and spend at least one hundred billion MNT on agriculture and farming and support meat factories with a circulation of loans. The main objective should be to accumulate foreign currency which would act as an immune system against global economical crisis, according to the information released at the seminar.
The speech of the Former Prime Minister of Mongolia, S.Sodnom, drew a great deal of attention at the event. He stated that Mongolia is not prepared for an economic crisis and that the country needs to broaden foreign trade and increase exportation. To do that, factories of meat and leather products and the agricultural sector must be developed quickly in order to establish the exportation of new goods.
He further stated that the Atryn Gurvan Tour has increased its harvesting greatly and that at this point Mongolia is able to meet its domestic demands and that the left over amount after domestic needs are met should be exported abroad. He also noted that infrastructure problems such as the rail network and new energy and power supply issues should be addressed immediately.
The purpose of the meeting titled “Is Mongolia Prepared for Economic Crisis” was to come up with solutions to strengthen Mongolia’s economy by sharing expert’s opinions and present them to the government.
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