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http://zgm.mn/post/5412/

Mongolia’s GDP slumps by 6.1 percent in Q1

Mongolia’s GDP slumps by 6.1 percent in Q1
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http://zgm.mn/post/5412/
  • Monthly average household income increased by 19.7 percent year over year
  • Measure on the six-month exemption of social insurance contributions for the private entities covers more than 38,000 employers, which total around MNT 800 billion in the financing. It was reported that the decision applies to around 45,000 entities 

Mongolia’s gross domestic product dropped by 6.1 percent in the first quarter compared to the same period last year, the National Statistics Office (NSO) reported on Wednesday. According to the NSO, the economy amounted to MNT 7.2 trillion in the first three months of this year. 

The report also showed that the monthly average household income stood at MNT 1.5 million, increased by 19.7 percent from the previous year, and rose by MNT 133,600 from the previous quarter. During the reporting period, the monthly average household expenditure was MNT 1.6 million, increased by 17.1 percent year on year, and up by 8.3 percent from the previous quarter. This was mainly due to the Government’s package measures that had come into action from April, in an effort to ease the economic impact of the COVID-19 pandemic. The Government had instituted a six-month exemption of monthly social insurance contributions paid by employees and employers, who retain their employees on payrolls despite revenue drops. It was reported that the decision applies to around 45,000 entities. The measure on the six-month exemption of social insurance contributions for the private entities covers more than 38,000 employers, which total around MNT 800 billion in the financing, according to Minister of Labor and Social Protection Chinzorig Sodnom. According to the Bank of Mongolia, the preliminary results of the report regarding Mongolia’s grey list inclusion will be released on June 28, and the official response of the FATF is scheduled on June 24-25.

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Iron ore price rises to USD 68.4 per ton

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In the first three months, Mongolia’s industrial sector produced 895,700 tons of iron ore, 668,400 tons of iron ore concentrate, and 19,900 tons of zinc concentrate respectively. According to the current statistics, iron ore decreased by 348.300 tons or 28 percent, iron ore concentrate by 86.300 tons or 11.4 percent, fluorspar ore by 500,000 tons or 2.0 percent, and zinc concentrate by 4.0 thousand tons or 16.8 percent.In the first three months of 2020, iron ore exports reached 2.1 million tons or USD 141.1 million. Compared to the same period of the previous year, it decreased by 9,900 tons or 0.5 percent in volume and increased by USD 34.5 million or 32.4 percent in the monetary terms. The average price of iron ore was USD 51.4 per ton in the first three months of 2019, reached USD 68.4 in the same period of 2020, increasing by USD 17.0 or 33.1 percent compared to the earlier year. Iron ore prices on the world market are also rising amid reports that the Chinese economy is recovering. Currently, the Dalian Commodity Exchange (DCE) has risen iron ore price by 0.6 percent to 710 yuan per ton, while the Singapore Stock Exchange has risen 0.8 percent to USD 92.5. Since the beginning of the year, Mongolia had exported coal worth USD 513 million or 6.3 million tons, which decreased by 2.4 times compared to the same period of the previous year. The country has exported 671,000 barrels of oil, showing a fourfold decrease. Fluorspar export increased slightly by 15,000 tons, to 237,000 tons.

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Trade deficit of petroleum totals USD 248 million as of May

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Mongolia exported crude oil worth USD 24.8 million and imported USD 273 million of petroleum products in the first five months of 2020, which means the oil industry deficit reached USD 248 million. Fuel import contracted by 7 percent to 206,000 tons compared to the same period of the previous year. It plummetted by 20 percent to USD 101.8 million in price. Diesel fuel import decreased by 20 percent to 335,300 tons from a year ago, financially dwindled by 34 percent to USD 171 million. Domestic crude oil consumptions have been lowered predom-inantly due to the pandemic. Specifically, oil consumption has been deteriorated as a result of the suspension of export and obstacles in the mining industry, according to the fuel importers. Rosneft Oil Company decreased its border price of oil products supplied to Mongolia. On this subject, the retail price of AI-92 gasoline has been reduced by MNT 475 per liter, AI-80 by MNT 380, AI-95 by MNT 440, and diesel fuel by MNT 590 since March. PetroChina Daqing Tamsag LLC exports oil through the Bayankhoshuu border checkpoint, while Donshin Oil LLC exports by railway. Railway export has not been disrupted in the last few months. However, exports from the Bayankhoshuu border resumed after a period of disruption. Currently, there is no hindrance to exports, said the Mineral Resources and Petroleum Authority of Mongolia (MRPAM).

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Mongolia's SMI shows upward tend in may

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  • This was mainly due to the rapid recovery in the Business Confidence Index last month

Mongolia’s Sales Managers’ Index (SMI) is moving upward to a positive trend in May, according to the World Economics. This was due to the rapid recovery in the Business Confidence Index last month. However, the index remains below 50 points. Other key indicators show a slight improvement in the Sales Growth Index, while the Jobs Index shows weak demand. Mongolia’s economy has been hit hard by the pandemic, which was triggered by a temporary stagnation in China’s economy. As China opens up its economy, and many factories become more able to produce at nearly full capacity, the economy of Mongolia is following suit and responding positively. There is some way to go before the trend lines indicate renewed growth, but all indexes suggest the economy is moving in a positive direction, highlighted the World Economics. Mongolia is ranked 81 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Mongolia deteriorated to 81 in 2019 from 74 in 2018.

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BoP deficit reaches USD 665.4 million

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The foreign direct investment totaled USD 491.4 million, decreased by more than 20 percent year on year. The Bank of Mongolia (BoM) emphasized that the Oyu Tolgoi project made up more than 90 percent of the foreign direct investment as of the first quarter of the year.

In the first four months of 2020, the balance of payments (BoP) showed a deficit of USD 665.4 million. The BoP deteriorated by USD 988 million compared to a surplus of USD 322.9 million in the same period last year. As the balance of payments deteriorates, the current account balance deficits USD 389.6 million. At the end of April last year, the current account surplus was USD 689.3 million. Major exports fell sharply due to border restrictions imposed to prevent COVID-19 during the period. Specifically, coal exports at the end of May shrunk 2.6 times than the previous year. In terms of inflows, foreign direct investment totaled USD 491.4 million, which decreased by more than 20 percent year on year. The Bank of Mongolia (BoM) emphasized that the Oyu Tolgoi project made up more than 90 percent of the foreign direct investment as of the first quarter of the year.