Mongolian economy grew 6.3 percent in the first half of 2018, compared with 5.3 percent in the same period a year ago, the country's statistics office said on Wednesday, as the nation continues its recovery from a 2016 financial crisis. The cash-strapped Asian country's gross domestic product (GDP) reached 8 trillion tugrik ($3.27 billion) in the first six months of this year, the National Statistics Office said.
The growth rate is the highest since 2015 and mainly attributed to a 5.8 percent rise in the service sector and 9 percent growth in wholesale and retail trade, the office added. Mongolia grew at a double-digit annual rate over 2011-2013 as foreign investors rushed in to take advantage of its vast untapped mineral deposits. But clashes with investors, government overspending and declining commodity export revenues tipped the country into an economic crisis in 2016.
It was forced to turn to the International Monetary Fund for help last year after the crisis left it struggling to pay its debts. The country clocked a GDP growth of 1.2 percent in 2016 and 5.1 percent last year.
Despite the recovery, experts warn that Mongolia is still vulnerable to fluctuating commodity prices and hence more diversification is needed in order to sustain economic growth. "Mining continues to be the main contributor to faster-than-expected economic growth, which, unfortunately, is allowing the government room within the IMF programme to increase welfare spending," said Munkhdul Badral Bontoi, chief executive of Mongolia-based market intelligence group Cover Mongolia. "Improving export bottlenecks is key to sustaining this growth in an unpredictable commodity cycle," he added.
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