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