GDP up 6.4% in 3rd quarter of 2018

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Gross domestic product (GDP) by production at current price reached 12.8 trillion MNT in the first nine months of 2018, marking an increase of 800 billion MNT, or 6.4 percent, compared to the same period in 2017, the National Statistics Office (NSO) reported.

According to NSO, the growth was mainly attributed to an increase in the service sector by 349.2 billion MNT (seven percent) and a surge in net taxes on products by 305.5 billion MNT (22.9 percent). By preliminary estimation of production approach, GDP by production at current price reached 23.5 trillion MNT in September 2018, signifying an increase of 3.1 trillion MNT, or 15.1 percent, compared to the same period in 2017.

In the third quarter of 2018, seasonally adjusted GDP at 2010 constant prices increased by 0.8 percent compared to the previous quarter.

Constant price GDP refers to the level of GDP expressed in the price terms of a base period, in this case, 2010. The use of a time series of GDP in constant prices rather than current prices removes the impact of price changes and shows the volume change in GDP.

Calculating GDP by expenditure at current price puts it at 22.9 trillion MNT, marking a 2.9 trillion MNT (almost 15 percent) surge compared to the same period in 2017. At 2010 constant price, GDP by expenditure is 12.7 trillion MNT, up by 6.3 percent since the third quarter of last year. This increase was mainly due to increases of 1.4 trillion MNT (35.7 percent) in gross capital formation and 1.2 trillion MNT (12.7 percent) in export of goods and services.

Annual change of GDP, by percent (by production approach, at 2010 constant prices, same period of the previous years)

Preliminary estimation shows that the shares of final consumption, gross capital formation and net export in GDP were 60.6 percent, 40.6 percent and -1.2 percent, respectively. Compared to September 2017, the share of gross capital formation in GDP increased by 9.7 percentage points, while the shares of final consumption and net exports in GDP decreased by 3.7 and 6 percentage points, respectively.

The NSO report also covered the government budget. In the first 10 months of 2018, the equilibrated balance had a surplus of 341.9 billion MNT, which is a huge improvement compared to the 669.2 billion MNT fiscal deficit the government faced in October last year. Revenue to the state budget increased to 8.3 trillion MNT by the end of October this year, while expenditure also rose to 7.2 trillion MNT.

Total equilibrated revenue and grants, expenditure, equilibrated balance of the state budget as of October (billion MNT)

Tax revenue reached 6.7 trillion MNT, an increase of 1.6 trillion MNT, or 33 percent, compared to the same period of last year. Despite facing nearly 19 billion MNT decline in grants, transfers, income of special purposes and capital revenue, tax revenue saw a 33 percent growth due to increases of 444.2 billion MNT (33.9 percent) in value added tax, 427.3 billion MNT (32.2 percent) in income tax, 245.3 billion MNT (23.6 percent) in social security income, 210.9 billion MNT (51.4 percent) in excise taxes, 147.9 billion MNT (36.4 percent) in revenue of foreign activities, and 145 billion MNT (30.3 percent) in revenue of other taxes. Tax revenue comprised 79.6 percent of the revenue to the state budget while nontax revenue was 10.3 percent, and 7.3 percent was from the future heritage fund and 2.8 percent from the stabilization fund. Expenditure increased by 271.9 billion MNT or 6.1 percent compared to the same period in 2017. The increase was mainly due to a 199.5 billion MNT rise in current expenditure and 76 billion MNT surge in net lending. On the other hand, capital expenditure decreased by 3.6 billion MNT, or 0.6 percent.

In terms of trade, Mongolia traded with 153 countries from all over the world and the total trade turnover reached 10.8 billion USD, where exports were 5.9 billion USD and imports accounted for 4.9 billion USD.

Total foreign trade turnover jumped 24.4 percent, specifically 2.1 billion USD, of which exports by 755.9 million USD, or 14.6 percent, and imports by 1.4.billion USD, or 39 percent, compared to October 2017.

In the first 10 months of 2018, foreign trade surplus reached 137.5 million USD, which is an 84.4 million USD decline from the 221.9 million USD in the same period of 2017.

Exports of mineral products, textiles and textile articles, natural or cultured stones, precious metals and jewelry make up to 95.3 percent of total export. On the other hand, 66.8 percent of imports are mineral products, machinery, equipment, electric appliances, transport vehicles and their spare parts and food products.

As of October, the gross industrial output reached 12.8 trillion MNT, showing an increase of two trillion MNT, or 19 percent, from the same period of the previous year. This increase was mainly affected by an increase of mining and quarrying gross output by 1.4 trillion MNT, of which mining of coal rose by 1.1 trillion MNT and mining of metal ores by 139.2 billion MNT.

Dulguun Bayarsaikhan