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
SOURCE: World Bank
- 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.