Mongolia's economic growth slowed dramatically in the first quarter of 2013, due to a fall in coal prices and a fall in demand from China, the country's main export market.
According to the National Statistical Office of Mongolia, GDP growth in January-March came in at 7.2%. While many countries across the globe would be over the moon to record any growth, let alone that pace of expansion, Mongolia saw its GDP grow by 16.7% in the first quarter of 2012.
Exports fell 5.5% year-on-year (YoY) in the first four months of the year, with overseas sales of coal - the country's largest export - falling 0.3m tonnes YoY to 5m tonnes in January-April 2013. At the same time, the fall in international coal prices shrank the value of those exports to just $338.9m, from $580.3m a year earlier.
Mongolia's declining growth is mainly due to the economic slowdown in neighbouring China, which accounts for over 90% of Mongolian exports. Chinese economic growth slowed to 7.7% in the first quarter, down from 7.9% in the final three months of 2012.
On April 30, the World Bank cut its 2013 growth forecast for Mongolia to 13% , down from an earlier forecast of 16.2%, mainly due to the drop in coal sales to China. While the forecast is slightly ahead of the 12.3% growth achieved in 2012, it is significantly lower than the 17% the previous year.
The World Bank warned that while Mongolia's growth forecast is still one of the highest worldwide, "significant uncertainty over key growth factors makes the economic outlook highly volatile." Mongolia is seeing an increase in non-performing loans this year, with debts outstanding at the end of April reaching to MNT7.8 trillion ($546m), up 5.2% month-on-month, and 30.8% year-on-year.
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