Released: 7 May 2021
Mongolian Economic Recovery Short Lived as New Lockdown Cuts Economic Activity
The Mongolian economy has been badly affected by Covid over the past year.
The rapid and strongly enforced shutdown of the Chinese economy early in 2020 caused immediate problems and was followed by the near complete shutdown imposed by the Mongolian Government, as Covid infection spread.
The ending of the lockdown on February 23rd, caused the first green shoots of recovery to become quickly apparent in March. The Business Confidence Index rose to an 8 month high of 53.4, suggesting a rapid return of Keynes famous "animal spirits", and a widespread belief that the next few months would see the return of economic growth.
However a resurgence of Covid infections in the capital forced the government to reimpose the lockdown on the economy in early April, with most people required to remain at home, aside from essential food buying trips.
The new young Harvard educated Prime Minister has made general vaccination a clear priority, and although the Covid infection rate continued to cause concern, sales managers were clearly feeling that prospects for the country were rapidly improving in March. Unfortunately the rapid increase in Business Confidence proved short lived, and the Business Confidence Index fell rather dramatically from 53.4 in March to 42.4 in April.
Both the Market Growth and Sales Growth Indexes also fell sharply, and the SMI Headline Index tumbled from 49.9 in March to 42.1 in April.
These numbers are not good and illustrate the direct harm done to economic activity in Mongolia caused by forced population lockdowns.
However, despite the somewhat depressing Sales Managers Index data for April, there is one item of news that suggests recovery may be relatively rapid. Over 30% of the Mongolian population has now received a first shot of a vaccine. As shown in Israel, the USA, the UK and elsewhere, vaccination works in cutting relatively rapidly the spread of the Covid virus. We therefore expect May and June to bring more positive data from the Sales Managers Survey.
Mongolia: Business Confidence Index
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- HEADLINE SALES MANAGERS’ INDEX (SMI)
- BUSINESS CONFIDENCE INDEX
- MARKET GROWTH INDEX
- SALES GROWTH INDEX
- PRICES CHARGED INDEX
- STAFFING LEVELS INDEX
- CURRENCY STRENGTH INDEX
- PROFIT MARGINS INDEX
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