Mongolia Selected Macroeconomic Indicators December 18, 213 For further information, please contact: SSelenge@imf.org
2 2 27 28 29 21 211 212 213 212 213 Q1 Q2 Q3 Oct. Nov. First 11 months Total US$-value 1,3 1,97 2,3 1,88 2,99,817,38 89 1,21 1,7 382 381,3 3,81 Mining 1,1 1,3 2,129 1, 2,3,1,32 7 1,19 98 38 3 3,713 3,3 Copper 3 812 83 2 771 9 839 29 19 27 7 12 79 81 Gold 27 23 38 178 113 122 3 93 11 8 12 3 Coal 11 18 3 882 2,273 1,92 29 333 21 97 12 1,72 1,7 Iron Ore 1 92 87 2 2 33 12 22 127 9 7 91 Crude oil 3 12 11 1 22 33 9 19 17 7 1 3 7 Zinc 17 1 122 13 13 131 3 32 1 13 8 117 11 Molybdenium 7 82 2 38 9 7 7 2 2 3 27 Fluor spar 9 8 9 9 13 1 21 28 7 9 77 Other mining 29 8 19 2 3 8 29 2 8 3 7 22 Non-mining 379 11 32 378 3 32 19 11 2 31 317 2 Textiles 23 227 192 21 21 23 13 11 7 1 11 228 272 Animals, animal products 27 32 9 2 3 1 22 17 Hides and skins 2 1 29 33 1 31 1 7 2 1 2 3 Other 8 1 8 71 27 2 31 11 1 2 18 (in thousands of tons, unless otherwise indicated) Export volumes Copper 8 83 87 9 7 7 1 13 18 1 27 8 Gold (tons) 11. 22.1 1.9.1 2.7 2.8 1. 2.2 2.8 1.2.2 2.3 7. Coal 3,29,19 7,113 1,72 21,1 2,91 3,,39 3,897 2,2 2,1 18,88 1,1 Iron Ore 2 1,13 1,98 3,,82,1 1,122 2,7 1,92 81 81,73,98 Crude oil ('s of barrels) 812 1,9 1,939 2,71 2, 3,8 982 1,1 1,39 3 3 3,231,32 Zinc 133 138 11 12 121 11 2 3 21 1 9 12 121 Molybdenium 3.2.1.7.8.2.3 1.1 1 1.3.3 3.9 3. Fluor spar 3 39 31 7 29 78 112 29.3 2.9 398 311 (annual change, in percent) Export volumes Copper - 1-3 1-2 28 7 3 11 Gold 91-1 -3-7 1 3 37 2-33 222 Coal 28 71 13 2-1 1-1 -2-8 1-1 Iron Ore 321 8 123 3 11-2 22 3 19 12 Crude oil 3 83 7 23 31 8 17 3 Zinc 1-21 1 17 3 3-2 -21 - - Molybdenium 28 3-28 -13 2-9 -2-2 -8 Fluor spar -3-1 29-28 -33-1 -31-29 -22 Implied prices Table 1. Mongolia: Exports (in millions of U.S. dollars) (annual change, in percent) Copper 7-8 23-13 -11-3 Gold 3 2 2 3-1 - 12-31 -8 Coal 2-3 22 1-1 -2-22 -28 - -18-33 Iron Ore 33-31 7 9 33-9 7 19 21 Crude oil -38 2 32 - - -2 12 11 9 Zinc -1-28 38-21 -7-22 -7-2 -3 Molybdenium -1-3 2-2 -1-2 -2-7 -11-1 Fluor spar 3-1 1 38 2 1 1-1 -8-1 (weighted average annual change, in percent) Mining export price 12-23 3 9-11 -1-11 -11-21 - -13 Mining export volume 2 1 21 1 3-12 2 1 Source: National Statistics Office Mongolia; and IMF staff calculations.
Jan-8 May-8 Sep-8 Jan-9 May-9 Sep-9 Jan-1 May-1 Sep-1 May-11 May-12 May-13 Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 28Q1 28Q2 28Q3 28Q 29Q1 29Q2 29Q3 29Q 21Q1 21Q2 21Q3 21Q 211Q1 211Q2 211Q3 211Q 212Q1 212Q2 212Q3 212Q 213Q1 213Q2 213Q3 21 22 23 2 2 2 27 28 29 21 211 212 3 Figure 1. Mongolia: Real Sector Developments The economy expanded by 11½ percent during the first nine months of 213 despite slowing exports and FDI inflows. The start of OT s open-pit mining is boosting industrial production. Mongolia s growth has been impressive... contributing to a decline in poverty. 2 1 1 - Real GDP growth rate: China vs. Mongolia (Year-on-year percent change) China Mongolia The economy expanded by 11.9 percent (y/y) in the third quarter of 213, led by the mining sector and non-mining industry. 2 2 1 1 Real GDP Growth (Contribution and year-on-year percentage change, 28Q1-213Q3) Net taxes Mining industry Agriculture Services Non-mining industry GDP at market prices (y/y growth) 2 1 1-2 2 1 1 3 3 2 2 1 1 Mongolia: Poverty Headcount (In percent) 21 211 212 National Urban Rural Source: Mongolian authorities. Industrial output rose 28 percent during Sept.-Nov. 213 (y/y), owing to the start of OT production. Non-mineral industrial output expanded by 9 percent (y/y). 3 2 1 Industrial Production (12-month percentage change in 3mma, March 28-November 213) 3 2 1 - - -1-2 -3 Gross Industrial Output Non-Mineral Industrial Output Mineral Industrial Output -1-2 -3 Source: Mongolian authorities. International copper prices are down 8 percent this year. Sources: Mongolian authorities. Coal export volumes are down 1 percent this year. 1, 8,, International copper price (U.S. dollars per metric ton, Jan. 1, 28-Dec. 18, 213) 1, 8,, 12 1 8 Coal Export Volume (Change, in percent, January 211-November 213) volume growth (y/y, 3mma) volume growth (y/y, 12mma) 12 1 8, Structuralprices as per FSL 1/, 2 2 2, Spot Rate (London Metal Exchange) Budget price (from 211: FSL-based structural price 1/) Price in amended budget 2, -2 - - -2 - - Sources: Bloomberg LP; Mongolian authorities; and IMF staff estimates. 1/ The structural price is the average of the past 12 years and projections for the current and subsequent 3 years.
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 Dec-7 Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 Figure 2. Mongolia: Overview of Macroeconomic Developments Expansionary fiscal policy in 212 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, 2, 1, -1, -2, 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) -, 1992 199 199 1998 2 22 2 2 28 21 212 Expansionary fiscal policy was the main driver of the acceleration of inflation in 212. - -1-1 -2-2 18 1 1 12 1 8 2-2 - - -8-1 -12-1 -1-18 The real effective exchange rate appreciated through June. In recent months there has been a correction. 1 12 1 8 Non-mineral fiscal balance (in percent of non-mineral GDP) Non-mineral (NM) on-budget balance Larger NM deficit due to DBM spending 2 2 27 28 29 21 211 212 Exchange rates of the togrog (Index, 2=1, Jan. 2-Nov 213; an increase is an appreciation) REER NEER - -1-1 -2-2 1 12 1 8 contributing to double-digit inflation in 212. Inflation in Ulaanbaatar was 11.1 percent in November 213 (y/y). 3 2 1-1 Consumer Price Inflation (in percent, December 27-November 213) 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, -2, -2, -3, -3, -, Current Account (23-212) Transfers, net Income, net Goods and services, net Current account Current account (RHS, in percent of GDP) 23 2 2 2 27 28 29 21 211 212 Chinggis bond proceeds raised reserves in late-212. Gross reserves amounted to US$2.3bn in November.,, 3, 3, 2, 2, 1, 1, Gross international reserves (In millions of U.S. dollars, January 29-November 213) 3 2 1-1 1 -,, 3, 3, 2, 2, 1, 1, -1-1 -2-2 -3-3 - Source: Mongolian authorities.
Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Figure 3. Mongolia: Fiscal Developments Expansionary fiscal policy pushed the deficit (including operations of the Development Bank of Mongolia (DBM)) to 1.9 percent of GDP in 212. Including DBM spending, the deficit reached 1.9 percent of GDP in 212. 1 Fiscal balance (in percent of GDP) 1 The 212 non-mining deficit topped the 28 record. Non-mineral fiscal balance (in percent of non-mineral GDP) - - -1-1 - - -1-1 -1-1 On-budget overall balance Increase in deficit owing to DBM spending 2 2 27 28 29 21 211 212 Spending now exceeds 7 percent of non-mineral GDP. 7 3 2 1 Non-Mineral Revenue and Expenditure (in percent of non-mineral GDP) Non-mineral revenue On-budget expenditure DBM spending 1/ 2 2 27 28 29 21 211 212 1/ The Development Bank of Mongolia provided loans of US$ 19 million for non-revenue generating public investment projects such as roads ("social benefit projects") in 212. The budget will need to repay these loans. -1-1 7 3 2 1-2 -2 Non-mineral (NM) on-budget balance Larger NM deficit due to DBM spending -2-2 2 2 27 28 29 21 211 212 Fiscal policy has been pro-cyclical. Cyclically-adjusted fiscal balance (CAB) vs. Output gap (in percent of potential non-mineral GDP) 1 1 12 1 Annual change of non-min. GDP gap Annual change of CAB (inverse) 12 1 8 8 2 2-2 -2 - - - - -8-8 -1-1 2 2 27 28 29 21 211 212 2/ 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. The Chinggis bond and DBM bond raised public debt by US$2.1bn in 212. 7 3 2 1 Public debt (in percent of GDP) Nominal public debt NPV of public debt 7 3 2 1 During the first 11 months of 213, the budget has run a small deficit (MNT 12bn or.7 percent of GDP). But this excludes DBM spending. 1 8 2-2 - Revenues and expenditure (excl. DBM, incl. carryover) (Twelve-month percentage change in 3mma, Jan. 28-Nov. 213) Revenue Expenditure 1 8 2-2 - 2 2 27 28 29 21 211 212 Sources: Mongolian authorities; and IMF staff esimates.
Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Dec-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 Dec-7 Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 Dec-7 Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 Imports remain subdued owing to the decline in FDI. Export growth remains weak, despite the start of operations of the OT open pit mine. 1 12 1 8 2-2 - - Exports Imports Figure. Mongolia: External Sector Developments The trade deficit continues to be large. Imports and Exports (Twelve-month percentage change in 3mma, Dec. 27-Nov. 213) 1 12 1 8 2-2 - - The 12-month trade deficit remains over US$2 billion. 8, 7,,,, 3, 2, 1, Trade Balance (12-month rolling sums, in US$m, Dec. 27- Nov. 213) Trade balance (RHS, inverted scale) Exports (LHS) Imports (LHS) -, -, -, -3, -2, -1, Before the recent depreciation, the REER was appreciating more than in copper-producing peer countries (e.g. Chile and Peru). 1 1 13 12 11 1 Real Effective Exchange Rates (Index, 2=1; a rise denotes a real appreciation. Jan. 8-Nov 13) Chile Lao P.D.R. Peru Mongolia 1 1 13 12 11 1 Amid overall relatively strong export performance, nonmineral exports have underperformed. Export performance relative to other Asian countries (2Q1=1, 3mma, sa, Jan. 28-Nov. 213) High-income countries Middle and low income countries 3 Mongolia: Non-mineral exports 3 3 Mongolia: Total exports 3 2 2 1 1 2 2 1 1 9 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 19 basis points wider than the average for emerging market economies. 7 3 2 1 JP Morgan EMBI Global Sovereign Spreads (in basis points, January 1, 212-December 18, 213) Mongolia Emerging mrkts. (EMEs) Vietnam Source: Bloomberg LP. Philippines Sri Lanka Mongolia spread over EMEs 7 3 2 1 Stock prices of 3 mining companies operating mostly in Mongolia (MMC, TRQ, South Gobi) have slumped. 1 1 12 1 8 2 Stock Prices for Mining Companies (Index, January 1, 211=1, Jan. 1, 28-Dec. 18, 213) 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, 211 (in percent) _ MMC (coal) -89 TRQ (copper) -8 South Gobi (coal) -92 Rio Tinto (diverse) -2 Copper price -2 1 1 12 1 8 2
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 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 Jan-9 May-9 Sep-9 Jan-1 May-1 Sep-1 May-11 May-12 May-13 Dec-7 Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 Dec-7 Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 7 Figure. Mongolia: Monetary Developments Bank lending has picked up rapidly in recent months. The growth of private sector credit accelerated to 8 percent in November (y/y). Deposit growth amounted to 31 percent (y/y). 1 12 1 8 2-2 - Bank Credit and Deposits (Quarter-on-quarter change, in percent (saar), Dec. 27-Nov. 213) Credit Deposits 1 12 1 8 2-2 - Banks loan-to-deposit ratio substantially exceeds the average for the past 8 years. 1 13 12 11 1 9 8 7 Commercial Banks' Loan-To-Deposit (L/D) Ratio (December 27-November 213) 8-year average Headline Loan-To-Deposit Ratio 1 13 12 11 1 9 8 7 Banks are holding substantial overall excess reserves with the Bank of Mongolia, mostly in foreign currency. 12 1 8 Excess Reserves (June 29-November 12, 213) 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 2 2 Bank lending rates on 1-year togrog loans averaged 18.8 percent in October. 2 2 1 Commercial banks' interest rates (Percent per annum, end-of-period, Jan. 29-Oct. 213) 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 2 2 1 2 1 1 1 1 In three steps, the Bank of Mongolia s Monetary Policy Committee lowered the policy rate 27 bps, to 1. percent. 2, 1,8 1, 1, 1,2 1, 8 2 Central Bank Bills (CBBs) (Jan. 1, 29-Dec. 18, 213) CBBs outstanding (in billions of togrogs, LHS) 7-day CBB rate (in percent, RHS) 8-day CBB rate (in percent, RHS) 2 1 1 New regulations to strengthen bank capitalization are being phased in amid low reported NPLs. 2 2 1 1 Bank Capitalization and Asset Quality (In percent, January 29-October 213) Nonperforming loans to total loans Bank capital to risk-weighted assets 2 1 1