Author: Gan-Ochir Doojav, Bank of Mongolia
The Mongolian economy has faced sharp recession during the COVID-19 pandemic. The government implemented prompt measures to contain the spread of the virus, such as social distancing and border closures. These have proven successful, as there was no reported community transmission until the middle of November 2020.
The economic costs though were significant. The fall in external and domestic demand led to a 9.7 per cent contraction in GDP in the first half of the year. Adverse external shocks are reflected in the exchange rate and gross reserves. Compared to the beginning of the year, the domestic currency, the Togrog, depreciated against the US dollar by 4 per cent and gross international reserves have fallen by US$700 million, although this is primarily because a domestic bank paid a US$500 million US dollar bond repayment.
Economic policy has loosened significantly to maintain stability and protect…