Wednesday, August 17, 2016

Mongolia Sales growth slightly higher in July

World Economics:

The Mongolian Sales Managers’ Index indicates that the economy is close to growth after a 3 year long recession. The key monthly Sales Growth Index, which is an accurate gauge for GDP growth, has posted the highest value of 49.5 since October 2013 and only just below the 50.0 ‘no change’ level that separates growth from contraction. Business confidence is tentatively strengthening on the back of improved sales and market growth but fluctuations in the strength of the Tugrik and the possibility of a harsh winter will no doubt weight on businesses.

The Mongolian currency, the Tugrik, has been the worst performing currency over the last month and year. It is down over 7% this month alone. However with a new government that has a mandate for change I expect new policies to be put into place. I would also not rule out another IMF program as the previous government really ran up a tremendous amount of debt in order to try and compensate for the weak economy. 

The new government now has to deal with this mess and has been getting as much bad news out as possible which is contributing to the decline in the currency. I still think Mongolia has tremendous prospects long term but they have a row to how in the near term. 

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