On 19 October, the OECD, in co-operation with the Government of Mongolia and with the European Union’s financial support, held a webinar on weathering the economic storms in Central Asia. Participants discussed the observed and expected impacts of the Russian invasion of Ukraine and the zero-COVID policy in China on the Mongolian economy. The webinar was organised as part of the OECD Policy Component of the EU Central Asia Invest initiative and brought together the OECD, the EBRD, the World Bank, and representatives of the public and private sectors in Mongolia.
Opening the webinar, Mr Batjargal Khandjav, State Secretary for Economy and Development, provided an overview of the main impacts of the COVID-19 pandemic on Mongolia, the zero-COVID policy in China affecting bilateral trade, as well as the initial impacts of the war in Ukraine. Looking forward, the State-Secretary then outlined future challenges, as well as policy reforms to address them, welcoming the webinar as a timely opportunity to exchange views with the OECD and other institutions on the way forward.
Mr Marco Ferri, Deputy Head of Mission in the European Union (EU) Delegation, detailed the eight sanctions packages taken by the EU to respond to Russia’s war in Ukraine. Following up on the State Secretary’s remarks, Mr Ferri reiterated the EU’s support to the government of Mongolia in addressing the challenges of food security, as well as investment attraction and economic diversification.
Ms Amélie Schurich-Rey, Policy Analyst in the OECD Eurasia Division, presented the OECD findings on the impact of the war and zero-COVID policies in China on Mongolia. She described how the combination of the post-pandemic economic legacy, increased inflation and food imports, reduced commodity exports, and mounting uncertainty have further exposed Mongolia’s vulnerabilities in terms of public debt, resource dependence, and connectivity. Ms Schurich-Rey also provided an overview of Mongolia’s first policy responses and discussed longer-term policy options, highlighting the need for attracting investment to non-mineral sectors, as well as seeking alternative trade routes and partners.
During the second session, Mr Eric Livny, Lead Economist for Central Asia at the EBRD, detailed the different transmission channels of both the war and China’s zero-Covid policy on Central Asian economies, and Mongolia in particular. He noted that the catastrophic spring forecasts had not materialised, as elevated commodity prices are a major compensating factor for all Central Asian economies, but noted Mongolia’s vulnerabilities in terms of inflation, debt sustainability, and growth dependence on sectors exposed to large cyclical fluctuations (agriculture, mining and quarrying, tourism and hospitality).
Mr Jose-Luis Diaz Sanchez, Economist at the World Bank then discussed challenges and prospects for Mongolia’s export diversification and connectivity agendas. In particular, he discussed how measures to improve transport connectivity and human capital can promote value-added in exports, and diversify trade partners and routes.
The session was concluded by Mr Tompson underlining the importance of dialogue between the EU, the OECD, other international organisations and representatives of Mongolia’s public and private sector to help Mongolia weather the current economic storms.