Developing Asia will maintain its strong economic growth in 2015 and 2016 supported by soft commodity prices and recovery in the major industrial economies, says a new Asian Development Bank (ADB) report. The report forecasts developing Asia will achieve gross domestic product (GDP) growth of 6.3 percent in both 2015 and 2016, the same as in 2014. Growth in Mongolia is forecasted to be 3.0 percent and 5.0 percent in the same period, from 7.8 percent in 2014.
For Mongolia, growth is forecasted to slow to 3.0 percent in 2015, reflecting necessary fiscal and monetary tightening to contain inflationary and balance of payments pressures. Assuming a stable external environment and the resumption of major investment in mining in 2015, economic growth should recover to 5.0 percent in 2016.
Consumer price inflation, which peaked in July 2014 at 14.9 percent year on year following expansionary monetary and fiscal policies and currency depreciation, dropped to 9.3 percent in February 2015 as monetary policy was tightened and is expected to meet the central bank's policy taget of 7.0 percent by the end of 2016.
The government's immediate policy challenge is to tighten monetary and fiscal policy to address pressure on the balance of payments, while safeguarding financial sector stability, debt sustainability, and the welfare of the population, especially for citizens living under the poverty line.
Nominal public debt to GDP, including the central bank's foreign liabilities, rose from 31.0 percent in 2010 to 77.4 percent in 2014 with the consolidated deficit peaking at 11.5 percent of GDP last year. While some recent fiscal reforms are steps in the right direction, such as bringing Development Bank of Mongolia expenditures partly on budget, there is a need to strengthen debt management, especially by ensuring that borrowed funds are invested in a manner that increases the competitiveness of Mongolia's key economic sectors. It is also important to prepare for the repayment of significant laibilities in 2017-2018. Diversification of the economy also remains a central challenge, to ensure more consistent growth patterns, and for generating jobs, which the capital-intensive minerals sector is less apt to do.
Developing Asia will maintain its strong economic growth in 2015 and 2016 supported by soft commodity prices and recovery in the major industrial economies, says a new Asian Development Bank (ADB) report. The report forecasts developing Asia will achieve gross domestic product (GDP) growth of 6.3 percent in both 2015 and 2016, the same as in 2014. Growth in Mongolia is forecasted to be 3.0 percent and 5.0 percent in the same period, from 7.8 percent in 2014.
For Mongolia, growth is forecasted to slow to 3.0 percent in 2015, reflecting necessary fiscal and monetary tightening to contain inflationary and balance of payments pressures. Assuming a stable external environment and the resumption of major investment in mining in 2015, economic growth should recover to 5.0 percent in 2016.
Consumer price inflation, which peaked in July 2014 at 14.9 percent year on year following expansionary monetary and fiscal policies and currency depreciation, dropped to 9.3 percent in February 2015 as monetary policy was tightened and is expected to meet the central bank's policy taget of 7.0 percent by the end of 2016.
The government's immediate policy challenge is to tighten monetary and fiscal policy to address pressure on the balance of payments, while safeguarding financial sector stability, debt sustainability, and the welfare of the population, especially for citizens living under the poverty line.
Nominal public debt to GDP, including the central bank's foreign liabilities, rose from 31.0 percent in 2010 to 77.4 percent in 2014 with the consolidated deficit peaking at 11.5 percent of GDP last year. While some recent fiscal reforms are steps in the right direction, such as bringing Development Bank of Mongolia expenditures partly on budget, there is a need to strengthen debt management, especially by ensuring that borrowed funds are invested in a manner that increases the competitiveness of Mongolia's key economic sectors. It is also important to prepare for the repayment of significant laibilities in 2017-2018. Diversification of the economy also remains a central challenge, to ensure more consistent growth patterns, and for generating jobs, which the capital-intensive minerals sector is less apt to do.