Улаанбаатар
Policy rate decline leads to an increase in domestic investment
Economy
Ulaanbaatar
/MONTSAME/. In
the first half of this year, macro economy has grown by 6.3 percent due to operations
in the mining sector and the increase in commodity prices.
Specifically,
the mining sector has grown by 24 percent, and net tax on products by 23
percent. During the presentation of the Q2 review and bank competitiveness
report, the Mongolian Bankers Association reported that the growth in other sectors
has slowed down.
In addition, in terms of demand, household consumption
fell by 9 percent, while investment increased by 12 percent.
The decrease in the policy rate has led to an increase in domestic investment. Due
to the pandemic, export has declined in volume and shipping costs have
increased five times compared to the pre-pandemic period. In July of this year,
inflation increased by 7.4 percent in Mongolia compared to the same period of the
previous year. Foreign shipping cost negatively affected inflation in various countries.
Economist
of the Mongolian Bankers Association G.Batzorig said, “The Government announced
the ‘MNT 10 trillion program’ to support the economy. In the first half of this
year, total loans have been increasing due to the three percent interest rate
loans and 9 percent repo financing. It has reached the point where one of every
ten loans is non-performing. Overdue loans, which increased due to the four strict
lockdowns imposed during the pandemic, is expected to decrease in the future.
Outstanding
loan balance increased by 10
percent
on average in the first half of this year, and the amount of new loans increased by 57 percent in the second quarter.
In addition, loan packages have
been rising since the beginning of the year. This was due to the MNT 10
trillion program.”
