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Редакцийн зурвас

About the shrink substituting growth

 

The COVID-19 pandemic is causing the entire economy of the globe to shrink. Just a month ago, the biggest names among economists and banks were saying it was too early to talk about a potential crisis. Now we are seeing an initial forecast of a global downturn. A more pessimistic, but realistic forecast of a 3 percent growth in China, which has seen over 6 percent for the last three decades, is more common nowadays. If the memory serves right, the global financial market and commodities were struck heavily after the discussions of China’s growth shrinking to 6 percent from 7 percent. But that 6 percent is in the risk of getting cut to 1. While the world’s most powerful economic driver is facing such disruption, the developed economies, such as the U.S and Europe are dealing with a headache of how to minimize the downturn.

The recipe for crisis is already set. There is a reason why it is named “The Great Lockdown”. The lockdown in the 10 biggest economies is creating a supply and demand shortage, a full-blown closure for manufacturers and services, and massive unemployment.

This makes it certain that the pillars of Mongolia’s GDP, namely the services, tourism, and mining industries will be struck heavily by the above-mentioned issues. The country already admits to the difficulties of the situation. Although coal transportation is restored, the entry restrictions forced the key exports to release their employees on paid or seasonal leave. While the country has lost about USD 544 million in revenue from coal and copper exports in the first quarter, the tax revenue from mining lowered by MNT 170 billion in the first two months.  Since it became certain that the lockdown will continue on to the second quarter, it is time to bring up the shrink rather than growth.

The Mongolian Government’s MNT 5.1 trillion stimulus package will not come anywhere close to securing growth. The Finance Minister drained his last resorts on the package. However, the Government’s intention of defending certain sectors and businesses of certain people is getting more transparent as the crisis deepens. Surely, the policy will not reach the SMEs who are on the brink of collapse.

Maybe the Government would have had rooms to act up if they did not strangle the mining industry and businesses. But it still is not too late for that.  

Агуулга

  • Covid-19

    Crisis calls for a relief, Mongolia doesn’t have the latter

    Eventually, major global economies such as the USA and Europe followed suit, causing demands to vanish.

    Хуудас 8

  • Business

    Work on the Underground Project progress is being slowed

    Oyu Tolgoi collaborated with over 560 Mongolian businesses last year.

    Хуудас 13

  • Market

    Unprecedented risk of COVID-19 remains impossible to predict

    Economists agree that the situation will be followed by increased and prolonged economic difficulties.

    Хуудас 18

  • Economy

    Coronavirus and Governments

    International Monetary Fund highlighted the need to take three specific measures.

    Хуудас 22

  • Positions

    The Government should scratch loan interests and provide financial relief. But…

    Mongolian economists, analysts, and business corporations have started voicing their concerns. Let’s see some of them.

    Хуудас 26

Эрхлэн гаргагч

Э.Долгион


Үүсгэн байгуулагч

David D'Astoli


ГҮЙЦЭТГЭХ ЗАХИРАЛ

Б.Батманлай

ЕРӨНХИЙ ЭРХЛЭГЧ

С.Болд-Эрдэнэ

Дизайн Директор

О.Болдбаатар


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Шинэ дугаар 2020/07-08

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