Mongolia Economic Growth Accelerates as State Spending Increases

August 13 07:27 2013 Print This Article

Bloomberg.com  2013-08-12 16:00:01.3 GMT

By Michael Kohn
Mongolia’s second-quarter economic
growth accelerated from the first three months of this year as
the government boosted spending on infrastructure.
Gross domestic product grew 14.3 percent in the three
months from April through June, compared with 7.2 percent in the
first quarter, the National Statistics Office of Mongolia said
yesterday. Expansion in the first half was 11.3 percent,
compared with an annual pace of 12.4 percent in 2012.
Mongolia, which raised $1.5 billion in a sale of bonds last
year, has increased government spending this year as foreign
investment plunged and slowing demand from China, which buys
more than 90 percent of its exports, cut sales of coal by almost
half. The Mongolian central bank has reduced its policy rate
three times this year to aid growth.
Spending of proceeds from the bond sale “contributed much
to the economy in the second quarter,” Ganbaatar Gerelt-Od,
senior vice chairman of the National Statistical Office of
Mongolia, said in an interview from Ulaanbaatar yesterday. A
more than 20 percent increase in agricultural production also
fueled growth, he said.
Projects funded by the bond sale include the construction
of roads linking six provinces to Ulaanbaatar, according to
Deputy Minister of Economic Development Ochirbat Chuluunbat.
Mongolia’s economy, fueled by a mining boom, grew at a
record 17.5 percent pace in 2011. That pace slowed after the
country implemented measures to increase government oversight of
the mining industry, which spurred disputes with companies
including Rio Tinto Group and discouraged foreign investments.
The World Bank in April cut its forecast for annual growth this
year to 13 percent from an earlier 16.2 percent.

Investment Slows

Foreign investment in the first half declined 43 percent
from a year earlier to $1.41 billion, according to central bank
data. Mongolia’s coal exports fell to $542.4 million from $1
billion, government data showed. Total exports in the first half
slid to $2.35 billion from $2.53 billion, according to the
statistics office.
Mongolia’s currency, the tugrik, has fallen 13 percent this
year, hitting a four-year low last week.
In the first seven months of this year, Mongolia exported
$595.5 million of coal, down from $1.16 billion a year earlier,
the statistics office said yesterday. Gold exports increased to
4.7 tons from 1.2 tons, it said.

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–Editors: John Liu, Allen Wan

To contact the reporter on this story:
Michael Kohn in Ulaanbaatar at +65-6212-1000 or
mkohn5@bloomberg.net

To contact the editor responsible for this story:
John Liu at +86-10-6649-7565 or
jliu42@bloomberg.net

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Saranchimeg Enkhee
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