A recent report by the World Bank has noted that Mongolia’s economy continued to experience a high growth rate last year, and the report has predicted that the economy will grow at a similar rate in 2013.
The report noted that while last year’s growth rate was high, at 12.3 percent, it was lower than anticipated. The lower rate was due to a drop in coal exports last year, in response to China’s economic slowdown and its reduced demand for coal. With signs of reviving demand for coal this year, Mongolia’s growth rate is expected to be slightly higher in 2013 than it was in 2012. The World Bank’s forecast for Mongolia’s growth rate this year is 13 percent, one of the highest in the world. Inflation slowed to 9.8 percent in March this year, down from double-digit inflation in 2012.
The World Bank report noted that despite the good growth figures, Mongolia had to finance a large fiscal deficit of 8.4 percent of GDP last year. This was a record high deficit for the past 13 years. The report noted that another large fiscal deficit is likely in 2013. This year Mongolia has embarked on its largest infrastructure investments ever, partly financed through a successful sovereign Chinggis bonds issuance. The World Bank warned that attention should be paid to preparing the investments rigorously to ensure maximum socioeconomic returns and avoiding potential wastage of public resources. The bank also noted that attention should be paid to reflecting the financing of these infrastructure investments transparently in the national budget.