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FEATURE STORY

Mongolia Economic Update - June 2014

July 3, 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.