OT deal is just what the doctor ordered for a sick economy

Source: Mongolian Economy

The landmark agreement to push forward the underground expansion project at the Oyu Tolgoi copper mine has many excited that Mongolia's economy will return to levels similar to the boom years of 2011 and 2012. But while Oyu Tolgoi will help the central bank sidestep financial crisis and may help lift growth, an immediate turn around isn't likely.

After the narrowing of the current account deficit last year to 8 percent of GDP, Mongolia reached a trade surplus for the first quarter of this year. However, the falling demand for goods typically purchased from abroad that caused the tilt is also a sign of economic weakness.  Investment into Oyu Tolgoi, and perhaps even other mines such as the Tavan Tolgoi coking coal mine, could lift growth to as high as 8 percent, said Bold, although the baseline projection for GDP growth was between 4 and 6 percent. “The worse period is over,” said Bank of Mongolia Chief Economist Sandagdorj Bold.