Mongolia Selected Macroeconomic Indicators September 19, 2013

Transcription

1 Mongolia Selected Macroeconomic Indicators September 19, 13 For further information, please contact:

2 Jan-8 May-8 Sep-8 Jan-9 May-9 Sep-9 Jan-1 May-1 Sep-1 May-11 Sep-11 May-1 Sep-1 May-13 Sep-13 8Q1 8Q 8Q3 8Q 9Q1 9Q 9Q3 9Q 1Q1 1Q 1Q3 1Q 11Q1 11Q 11Q3 11Q 1Q1 1Q 1Q3 1Q 13Q1 13Q Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-1 Jun-1 Sep-1 Dec-1 Mar-13 Jun Figure 1. Mongolia: Real Sector Developments The economy expanded by 11½ percent during the first half of 13, despite slowing exports and FDI inflows. Mongolia s growth has been impressive... contributing to a decline in poverty Real GDP growth rate: China vs. Mongolia (Year-on-year percent change) China Mongolia Growth reaccelerated to 1.3 percent (y/y) in the second quarter of 13 from 7. percent (y/y) in the first quarter Real GDP Growth (Contribution and year-on-year percentage change, 8Q1-13Q) Agriculture Non-mining industry Services Net taxes Mining industry 1 GDP at market prices (y/y growth) Mongolia: Poverty Headcount (In percent) National Urban Rural Source: Mongolian authorities. Industrial output during May-July was 13.9 percent higher than during the same period last year Industrial Production (1-month percentage change in 3mma, March 8-July13) Gross Industrial Output Non-Mineral Industrial Output Mineral Industrial Output International copper prices are down 7 percent so far this year. 1, 8,,,, International copper price (U.S. dollars per metric ton, Jan. 1, 8-Sep. 19, 13) Structuralprices as per FSL 1/ Spot Rate (London Metal Exchange) Budget price (from 11: FSL-based structural price 1/) Price in amended budget 1, 8,,,, Coal export volumes may have started to bottom out from their year-long slump Coal Export Volume (Change, in percent, January 11-August 13) volume growth (y/y, 3mma) volume growth (y/y, 1mma) Sources: Bloomberg LP; Mongolian authorities; and IMF staff estimates. 1/ The structural price is the average of the past 1 years and projections for the current and subsequent 3 years.

3 Jan- Jul- Jan- Jul- Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 3 Figure. Mongolia: Overview of Macroeconomic Developments Expansionary fiscal policy in 1 supported growth but also put pressure on inflation and the current account. The successful international bond issuance boosted reserves. Strong demand growth in recent years may have outstripped the growth of Mongolia s production capacity.,,, 3,, 1, -1, -, Output Gap Estimates (based on HP filter) Mineral Output Gap (in percent of mineral GDP, RHS) -3, Non-mineral Output Gap (in percent of Non-mineral GDP, RHS) -, GDP (in bil Tog, LHS) -, Potential GDP (in bil Tog, LHS) Output gap (in percent of GDP, RHS) -, Expansionary fiscal policy was the main driver of the acceleration of inflation in Non-mineral fiscal balance (in percent of non-mineral GDP) Non-mineral (NM) on-budget balance Larger NM deficit due to DBM spending contributing to double-digit inflation in 1. Inflation decelerated to 8. percent in August Consumer Price Inflation (in percent, January 8-Aug 13) Non-food items (contribution to headline CPI) Food items (contribution to headline CPI) Headline CPI (y/y) Non-food CPI (y/y) Food CPI (y/y) It also kept the current account significantly in deficit even as imports for the FDI-financed OT mine wound down. 1, - -1, -1, -, -, -3, -3, -, Current Account (3-1) Transfers, net Income, net Goods and services, net Current account Current account (RHS, in percent of GDP) Through July, the nominal exchange rate was quite stable, putting the REER on an appreciating trend Exchange rates of the togrog (Index, Jan. =1, Jan. -Jul, 13; an increase is an appreciation) 1 REER NEER Chinggis bond proceeds raised reserves in late-1. Gross reserves amounted to US$.7bn by end-august.,, 3, 3,,, 1, 1, Gross international reserves (In millions of U.S. dollars, January 9-August 13),, 3, 3,,, 1, 1, Source: Mongolian authorities.

4 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Figure 3. Mongolia: Fiscal Developments Expansionary fiscal policy pushed the deficit (including operations of the Development bank of Mongolia (DBM)) to 1.9 percent of GDP in 1. Revenue has performed well in recent months. During the first 8 months of 13 the on-budget deficit is limited to MNT 97 billion on contained spending. 1 Revenues and expenditure (excl. DBM, incl. carryover) (Twelve-month percentage change in 3mma, Jan. 8-August 13) 1 Including capital spending settled in Q1 of 13, the 1 fiscal deficit reached 7. percent of GDP. Including DBM spending, the deficit reached 1.9 percent of GDP in 1. 1 Fiscal balance (in percent of GDP) Revenue Expenditure Spending now exceeds 7 percent of non-mineral GDP 7 Non-Mineral Revenue and Expenditure (in percent of non-mineral GDP) Non-mineral revenue On-budget expenditure DBM spending 1/ On-budget overall balance Increase in deficit owing to DBM spending and the non-mining deficit topped the 8 record. - Non-mineral fiscal balance (in percent of non-mineral GDP) / The Development Bank of Mongolia provided loans of US$ 19 million for non-revenue generating public investment projects such as roads ("social benefit projects") in 1. The budget will need to repay these loans. Thus continuing the pattern of pro-cyclical fiscal policy. Cyclically-adjusted fiscal balance (CAB) vs. Output gap (in percent of potential non-mineral GDP) Annual change of non-min. GDP gap Annual change of CAB (inverse) / The cyclically adjusted fiscal balance is the overall balance net of cyclical effects. Cyclical effects are computed using country specific elasticities of aggregage revenue and expenditure series. In this case, the elasticity assumptions are 1 for revenue and for spending. - - Non-mineral (NM) on-budget balance Larger NM deficit due to DBM spending The Chinggis bond and DBM bond raised public debt by US$.1bn. These proceeds remained largely unspent. 3 1 Public debt (in percent of GDP) Public debt Public debt (net of unspent amount) NPV of public debt NPV of public debt (net of unspent amount) Sources: Mongolian authorities; and IMF staff esimates

5 Feb-1 Mar-1 May-1 Jun-1 Aug-1 Sep-1 Nov-1 Dec-1 Feb-13 Mar-13 May-13 Jun-13 Aug-13 Sep-13 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Figure. Mongolia: External Sector Developments The trade deficit continues to be large. Import growth has picked up on accelerating private credit growth. Export growth remains negative on a 3mma-basis despite the start of exports from OT in July Imports and exports (Twelve-month percentage change in 3mma, Jan. 8-August 13) Exports Imports The 1-month trade deficit remains in excess of US$ billion. 8, 7,,,, 3,, 1, Trade Balance (1-month rolling sums, in US$m, Jan. 8-August 13) Trade balance (RHS) Exports (LHS) Imports (LHS) -, -, -, -3, -, -1, The REER is trending upward and appreciating more than in copper-producing peer countries (e.g. Chile and Peru) Real Effective Exchange Rates (Index, =1; a rise denotes a real appreciation. Jan. 8-July 13) Chile Lao P.D.R. Peru Mongolia Amid strong overall export performance, non-mineral exports have underperformed but a recent pickup is visible. (Q1=1, 3mma, sa, January 8-August 13) High-income countries Middle and low income countries 3 Mongolia: Non-mineral exports 3 Mongolia: Total exports 1 1 Export performance relative to other Asian countries Source: IMF INS. 9 Sources: Haver Analytics; CEIC Data Company; and IMF staff estimates. Note: High-income countries include Australia, New Zealand, Japan, Korea, Singapore, and Taiwan; Middle- and low-income countries include Indonesia, Philippines; Sri Lanka, Vietnam, Bangladesh, and India. Mongolia s sovereign spread is now about basis points wider than the average for emerging market economies JP Morgan EMBI Global Sovereign Spreads (in basis points, January 1, 1-September 19, 13) Mongolia Emerging mrkts. (EMEs) Vietnam Source: Bloomberg LP. Philippines Sri Lanka Mongolia spread over EMEs Stock prices of 3 mining companies operating mostly in Mongolia (MMC, TRQ, South Gobi) have slumped Stock Prices for Mining Companies (Index, January 1, 11=1, Jan. 1, 8-Sep. 19, 13) Mong. Mining Corp. (MMC, in HK) Turquoise Hill (TRQ, in Toronto) South Gobi (in HK) Rio Tinto (London) Jan-8 Jan-9 Jan-1 Sources: Bloomberg LP.; and IMF staff estimates. Return since Jan.1, 11 (in percent) _ MMC (coal) -8 TRQ (copper) -7 South Gobi (coal) -9 Rio Tinto (diverse) -7 Copper price

6 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jun-9 Dec-9 Jun-1 Dec-1 Jun-11 Dec-11 Jun-1 Dec-1 Jun-13 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Figure. Mongolia: Monetary Developments Bank lending has picked up rapidly in recent months. The growth of private sector credit accelerated to 7 percent in July (y/y). Deposit growth amounted to percent (y/y) Bank credit and deposits (Quarter-on-quarter change, in percent (saar), Jan. 8-Aug. 13) Credit Deposits Banks loan-to-deposit ratio has now risen substantially above the average for the past 8 years Commercial banks' Loan-to-Deposit (L/D) ratio (January 8-August 13) 8-year average Headline L/D ratio Banks are holding substantial overall excess reserves with the Bank of Mongolia, mostly in foreign currency Excess Reserves (June 9-August, 13) Excess reserves on togrog deposits (in MNT bn, LHS) Excess reserves on forex deposits (in MNT bn, LHS) Required reserve rate (in percent, RHS) Excess reserves (in percent of reserve money, RHS) 3 3 The easing of monetary policy and inflation now seems to be translating into lower bank lending rates. 1 Commercial banks' interest rates (Percent per annum, end-of-period, Jan. 9-July 13) Headline CPI Lending rate (in togrog, 1 year) Lending rate (in US$, 1 year) Deposit rate (in togrog, average 1 year) Deposit rate (in US$, average 1 year) Spread on togrog lending and deposit rates In three steps, the Bank of Mongolia s Monetary Policy Committee lowered the policy rate 7 bps, to 1. percent. 1, 1, 1, 8 Central Bank Bills (CBBs) (January 1, 9-Sep. 11, 13) CBBs outstanding (in billions of togrogs, LHS) 7-day CBB rate (in percent, RHS) 8-day CBB rate (in percent, RHS) 1 1 New regulations to strengthen bank capitalization are being phased in amid low reported NPLs. 1 1 Bank Capitalization and Asset Quality (In percent, January 9-June 13) Nonperforming loans to total loans Bank capital to risk-weighted assets 1 1