BoM: External demand may slow growth in mining sector www.zgm.mn
The Bank of Mongolia (BoM) anticipated the Mongolian economy to increase by 5.6 percent in 2020. This figure is around the previous projection. Slowing external demand and trade conditions in the next year may decrease the mining sector growth, the central bank said. However, non-mining sectors are likely to be activated as a result of budget expansion. These uncertain situations, namely trade dispute acceleration, whether China’s coal import limitation would continue, exiting the FATF’s grey list, and the potential decrease in the Oyu Tolgoi underground investment could affect the economic growth in 2020. The economic growth was comparatively lower than its expected level in the first three quarters. This was mainly due to the poor performance of the mining industry, emphasized in an inflation outlook report. Thus, the report includes labor market performance. Reducing employment and soaring unemployment shows that labor market activity has been slowed in recent quarters. It reported that the unemployment rate has been slowing down since 2016, and it increased 10 percent in the last quarter. Central bank emphasized that inflation will gradually decrease to six percent due to supply factors, it may slightly increase in the fourth quarter of 2020, and stabilized around the central bank’s target level. As of December 2019, the inflation rate stands at 5.2 percent. BoM believes that inflation has been slowed down as the supply factors of meat and fuel decreases.