Tuesday, December 30, 2014

Mongolia Economic Update - December, 2014

KEY FINDINGS
The Mongolian economy is facing challenges from persistent economic imbalances

  • In 2014, economic growth slowed as it began to adjust to unsustainable economic imbalances.
  • Economic growth is likely to continue to soften in 2015 as the economy remains under pressure from the external imbalance and high inflation.  
External and financial vulnerabilities are growing
  • The external situation may become more vulnerable over time in the wake of large external debt repayments scheduled for 2017-18.
  • Deteriorating bank asset quality calls for heightened vigilance.
Priority now is to address the growing external risks
  • Economic policy needs to focus on addressing growing external vulnerabilities with tighter macro-economic policies and reviving foreign investment into the economy.
Some welcome steps were taken but further actions are needed
  • Monetary and fiscal policy became tighter.
  • Further policy adjustment is necessary.
Strong resolve of the new Government to address economic challenges is encouraging
  • The Government led the by the new Prime Minister with a grand collation of parties has been showing its resolve to address economic difficulties.
Economic Policy Framework
  • Macroeconomic policy needs to be tightened.
  • Strengthen prudential supervision and monitoring of the banking system.
  • Reviving foreign investment is critical to mitigate the external vulnerabilities.
Last Updated: Dec 18, 2014

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