Friday, July 4, 2014

Mongolia Economic Update - June 2014

Key Findings

Likely economic adjustment in 2014 as a result of growing external and internal economic imbalances
Three years of growth-oriented economic policies have led to large economic imbalances.
In 2014, the economy is undergoing an adjustment in response to the large external and internal imbalances.

Increasing short-term economic risks amidst the large balance of payments pressure and deteriorating financial soundness.
Large balance of payments pressure will likely persist in 2014.
Asset quality of banking sector is deteriorating.

Need for structural shift in the economic policy framework to restore economic and financial stability.
Monetary policy needs to be tightened to address high inflation.
Financial sector policy should focus on ensuring financial stability.
Fiscal policy should adhere to the fiscal discipline imposed by the Fiscal Stability Law (FSL).

Time to think about managing resource revenues more effectively
Mongolia has not accumulated savings from its resource revenues during the past high-growth period.

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