ADB predicts Mongolia’s economic growth at 6.7 percent in 2019


2019-04-05 14:32 GMT+8


In Asian Development Outlook (ADO) 2019, ADB projected Mongolia's economy to remain solid in the next two years. It estimated Mongolia's economic growth at 6.7 percent in 2019 and 6.3 percent in 2020, from the 6.9 percent growth rate recorded in 2018.

Asian newly industrialized economies excluding Hong Kong, Taiwan, South Korea, and Singapore are expected to grow 6.2 percent in 2019 and 6.1 percent in 2020. Growth is likely to slow slightly in 2019 and 2020, as global demand decreases and trade tensions become worse.

ADB’s Country Director for Mongolia Ms. Yolanda Fernandez Lommen said, “The economy has performed better than expected in 2018. Mongolia’s growth prospects continue to be positive going into 2019 and 2020. Strong macroeconomic performance in 2018 has helped restore investor confidence and improve macroeconomic stability. Focusing on strengthening public financial management rather than setting up new off-budget funds will also help ensure fiscal discipline extends beyond the International Monetary Fund program.”

Apart from consumption, services will also be key to growth, with transport expected to gain from higher mining exports. Manufacturing will also benefit from the increase in mining and expanded processing of meat for export. Construction activity will rebound, boosted by a large public investment program. Agriculture will continue to recover in 2019.

The bank expects average inflation to reach 8.5 percent in 2019 compared to 6.8 percent in 2018 as a result of rising domestic demand supported by higher government expenditure, as well as the effects of the MNT depreciation and higher fuel prices in the second half of 2018. These effects will be less pronounced in 2020, allowing inflation to stabilize at 7.5 percent.

In 2019, ADB expects to see an increase in government capital expenditure. Revenue growth, which was high in 2017 and 2018, is expected to moderate but could benefit from any of the upside risks to the growth outlook. The current account deficit will narrow in 2019 to 9.6 percent of GDP from 14.6 percent of GDP in 2018, as exports grow, in particular on anticipated large increases in gold shipments, and as car imports slow.

Mongolia remains vulnerable to external shocks, particularly in mineral price fluctuations bond issues and foreign direct investment inflows.

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