Mongolian growth exceeds expectations due to strong economic performance
Mongolia’s strong economic performance in the first half of this year will likely continue until the end of this year as coal exports and business confidence continue to strengthen.
Mongolian growth exceeds expectations due to strong economic performance. Mongolia’s strong economic performance in the first half of this year will likely continue until the end of this year as coal exports and business confidence continue to strengthen. Continued commitment to macroeconomic stability, coupled with a favourable external environment, should mean that Mongolia’s recovery continues. ADB forecasts continued growth for Mongolia’s economy at 4% and 3% in 2017 and 2018, respectively, compared to the 2.5% and 2% previously projected. Mongolia’s economy grew by 5.3% in the first half of 2017, recovering strongly from the 1.2% growth rate recorded in 2016. The main drivers of growth over the forecast period are the strong export performance of coal, which is expected to continue in the short-term, and the approval of the International Monetary Fund’s reform package in May, which has helped restore business confidence. Inflation averaged 3% in the first half of the year as the togrog depreciation from 2016 began to affect prices through higher import prices. The inflation forecast is revised down as a higher excise tax on fuel did not push up fuel prices as expected. With strong imports set to continue in the second half of 2017, the current account deficit is now seen widening this year and the next. ADB and the Government of Mongolia agreed on a new 4-year Country Partnership Strategy in May this year, which will help the country sustain inclusive growth in a period of economic difficulty. ADB will provide Mongolia up to $1.2 billion in financing until 2020.
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