Monthly Economic Review

DEVELOPMENT BANK OF MONGOLIA

Monthly Economic Review

(November, 2016)

Ulaanbaatar
2016

Monthly Economic Review

I. External trade
In the first 11 months of this year,
Mongolian total trade turnover declined by
4.9% compared with same month of last year
and it is influenced by the weaker growth of
export and import decrease by 11.9%. Total
export and import amounted USD 4,276.3
million and USD 3,079.6 million respectively.
Trade balance, maintaining its positive
performance during this year due to lower
import with USD 1,197.0 million in November
2016.

According to the state budget for 2017,

total revenue is expected to be 23.3% of GDP,
expenditure is expected to be 32.4 % of GDP,
while budget deficit is expected to be 9.1 % of
GDP1.
In 2017, taxes will not be increased to help
stability in the tax environment. Mongolian
government is aiming to improve infrastructure
in the mining sector and to generate budget
revenue by developing construction and
investment to accelerate megaprojects.
Figure 2. State budget (billion MNT)
Export (mln $)
Export growth, yoy (%)

Figure 1. External trade

Import (mln $)
Import growth, yoy (%)

6,000

Export (mln $)
Export growth, yoy (%)

Import (mln $)
Import growth, yoy (%)

6,000
4,000

60%
50%

4,000

40%

60%

2,000

30%

50%

20%
10%

40%
-2,000

0%
-10%

2,000

30%

20%

-4,000

10%

-6,000

-2,000

0%

-4,000

-10%
-20%

-6,000

-20%
-30%

-8,000

-40%
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11
2013

2014

2015

2016

-30%

-8,000

-40%
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11
2013

2014

2015

Source: www.1212.mn

2016

Source: www.1212.mn

Main reasons of weaker export growth (yoy)

were lower copper price and domestic demand
whereas the decrease of import was
significantly affected by the lower import of
mineral sector related machines, equipments
and as well as lower base metals.

According to the state budget 2017 approved

by Parliament, share of budget income and
expenditure in GDP during 2017 as follows:
Figure 3. Share of budget income expenditure in
GDP (%), GDP (bln MNT)
as a percent of GDP
32.3%

23.3%

II. State budget

8,568.9
6,160.2

As a result of state budget performance in

November 2016, the budget income and
expenditure grew by 0.6%, 26.2% as well as
MNT 5,059.3 billion, MNT 7,736.7 billion
respectively.

Source: Ministry of Finance

(2,408.7)
-9.1%
Budget income

Budget expenditure

: www.1212.mn

Budget deficit

Monthly Economic Review

III. Monetary policy

Bank of Mongolia is taking measures to
increase the yield for MNT assets in order to
protect the exchange rate of MNT and to
ensure economic stability in the medium term
and it raised its policy rate by 4.5 percentage
point to 15% in last August2.
Figure 4. Money supply (billion MNT)
2 (billion MNT)

Annual growth (%)

14000

50%

12000

40%

10000

30%

equipment and transport item decreased from

same time of previous year.

IV. Exchange rate

Throughout last 3 years, demand for the
main exporting commodities such as coal,
copper and terms of trade decreased, currency
inflow (FDI) reduced significantly3.
Trade balance, having its positive amount,
has been reached USD 1,197.0 million in first 11
months of this year thanks to the lowering
import in 2016.

8000
20%
6000
10%

4000

0%

2000
0

-10%
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9
2013

2014

2015

2016

Source: www.1212.mn, Mongolbank

Money supply (M2) reached MNT 11,619.0

billion at the end of reporting month, which
increased by MNT 1,809.9 billion (18.5 %)
compared to the same period in 2015
according to the latest report from Bank of
Mongolia.

Mongolian national currency (MNT)

depreciated drammatically against major
foreign currencies such as USD during the
reporting year owing to the less currency inflow
including foreign direct investment. Currently,
it depreciated against USD 24.6% compared
with beginning of this year and USDMNT
(BoMs official rate) fluctuated between 24682468 during December.
Figure 6. USDMNT (2014M01-2016M12)
USDMNT (BoM)

Change, daily (%)

2,500.00

3.0%
2.0%

2,300.00

1.0%

Figure 5. Annual inflation (%)

2,100.00
0.0%

Other,
0.5%

1,900.00

Food,
-0.3%

-1.0%
1,700.00

Household
equipment,
0.1%

-3.0%

1/2/2014
2/16/2014
3/31/2014
5/15/2014
6/29/2014
8/13/2014
9/27/2014
11/11/2014
12/26/2014
2/9/2015
3/26/2015
5/10/2015
6/24/2015
8/8/2015
9/22/2015
11/6/2015
12/20/2015
2/2/2016
3/15/2016
4/29/2016
6/13/2016
7/27/2016
9/10/2016
10/25/2016
12/9/2016

1,500.00

Education
, 0.1%

Transport,
-0.2%

-2.0%

Cloth, 0.2%

Housing,
-0.27%

Source: www.1212.mn,

Bank of Mongolia has been holding FX

auction twice a week to stabilize internal FX
market and to ensure operation transparency
in the internal FX market operation.

As for an annual inflation, showing its lowest

level during this year, dropped to 0.2% as of
November 2016 from 2.9% in November 2015.
In reporting period, cloth and education
item accounting for 0.2%, 0.1% of the annual
inflation while average price for food, housing
2

https://mongolbank.mn/documents/pressrelease/20160818e.pdf

Monetary policy guideline-2017

Monthly Economic Review

V. Balanced of Payment
According to the Balanced of payment (BoP)
result in October 2016, current account had a
deficit of USD 536.0 million, capital and
financial account was USD 525.5 million
respectively and BoP (total of current, capital
and financial accounts) equals -USD 277.8
million.
Table 1. Balanced of payment (million USD)4
201610
I. Current account

20160110

-93.8

-536.0

-62.9

-166.7

1. Goods balance

23.8

746.5

2. Services balance

I.1 Goods and services balance

-86.7

-913.2

I.2 Income balance

-20.9

-547.1

I.3 Current transfer

-9.9

177.8

63.1

525.5

II. Capital and financial account

II.1 Capital account

8.7

82.1

II.2 Financial account

54.4

443.3

7.3

-4,280.2

1. Direct investment
1.1 Abroad

-0.7

-4.3

1.2 In Mongolia

8.0

-4,275.9

2. Portfolio investment

40.6

532.7

3. Financial derivatives

-4.4

-4.1

4. Other investment

10.9

4,195.0

III. Net errors and omissions

-15.0

-267.2

Total of Current, Capital and Financial

Accounts

-45.6

-277.8

For the details of current account, goods

and trade balance USD 746.5 million, service
balance was -USD 913.2 million. Income
balance kept its minus level, -USD 547.1 million
and current transfer operated positively, USD
177.8 million.
Furthermore, capital and financial account
were USD 525.5 million because capital
account and financial account had positive
amounts USD 82.1 million and USD 443.3
million respectively.

Balanced of Payment performance, Oct 2016