World Bank warns of pre-election threats to economy
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The World Bank Group presented its East Asia and Pacific Economic Update yesterday, in which the bank highlighted a risk of delay in the implementation of mega projects in the mining sector triggered by the 2020 election. The bank noted that the growth outlook remains positive in 2018 and beyond, buoyed by robust growth in private consumption and private investment in mining and manufacturing. “Despite cross-border bottlenecks with China and weather-related shocks, including heavy flooding during the summer, the GDP growth exceeded the World Bank’s expectations in the first half of 2018, detailing that it was largely supported by a revived coal sector, and strong private investment mainly in mineral and trade sectors,” stated the report. However, the bank warned that there are substantial domestic and external exogenous risks to the outlook, including political uncertainty exacerbated by the 2020 election, which could trigger a delay in the implementation of mega projects in the mining sector; commodity market volatility and weakening global demand; climate shocks; revived bottlenecks at the China border; and effects of poor handling of the deficiencies of the anti-money laundering regime. “Growing political uncertainty could induce a sudden relaxation of the government’s commitment to structural reforms. Mongolia’s growth prospects could be adversely affected by the consequences of an escalating trade war and a potential reduction in global demand-mainly from China-for coal, copper and other commodities and the resultant decline in global commodity prices. Weather related shocks, resumption of non-trade barriers at the border with China, could also significantly affect Mongolia’s coal exports. Limited progress on addressing anti-money laundering deficiencies could potentially affect FDI inflows and the financial sector,” the World Bank reported.