Mr. Ch.Khashchuluun, Chairman of the National Development and Innovation Committee answered reporter’s questions on Economic growth, inflation and Development bank.
Q: Let’s start the conversation with the subject of Economy and Gross Domestic Product as they have increased by significant amount compared with the previous years?
Ch.Kashchuluun: The Real GDP in 2010 was 6 percent whereas it is 9.7 percent in the first quarter of this year. The rate is still increasing. Last year, the sectors with the greatest increases were: trades (23%), construction sector (15%), manufacturing factories (11.3%) and industrial enterprise sector (6.3%).
According to the statistic of the year 2010, our GDP was counted over 8 trillion MNT. GDP per capita reached over 2200 USD which is about 500 USD greater than the economic recession period in 2009. The growth of 9.7% in the first quarter of 2011 has never been recorded in the history of Mongolian Economy. The growth is increasing as well as the rate. There are some positive signs in the economy as we are seeing more production instead of larger portion of purchasing and spending. What we will also experience is decreased unemployment because “Employment support year” is actually providing more job opportunities. Demands for jobs are increasing and it is important to provide that.
Q: As the Economy is growing so fast, what about the inflation? Lots of economists say that inflation has direct relation with the Economic growth?
Ch.Kashchuluun: International organizations have approached it with such care that they thought increase in price will be much higher this year. Right now, the rate is much lower than expected. The inflation is around 5 percent right now. This is because large numbers of meats and vegetables were reserved last winter so that the price can be stable in the spring where usually demand for meat and vegetables are much higher. What we are expecting this year is the Economic growth to be more than 10% and inflation to be in single digit. The trade balance showed USD 1.5 billion surplus. This was an advantage because we have greater currency reserve which makes the value of MNT much higher. This is another reason to have lower inflation.
Large numbers of investments are planned for the countryside. We are creating all sorts of funds for the countryside so to increase investment in the countryside. According to our plan, we will see large number of improvements in the infrastructure sector this year. The planned works are: paved roads in Umnugobi province, thermal power station in Zavkhan province and works for 5th thermal power station is to start. In addition, the project to build Thermal power station near Oyu tolgoi and Tavan tolgoi will be decided this June.
Q: The development bank was established with bonds worth MNT 800 billion. MNT 350 billion will be spent on housing and apartments; did the working group calculate the rest of the funding for other sectors?
Ch.Kashchuluun: According to the Resolution No 15 of the SGK this year, the fund is available for 4 large projects which are paved roads, large complex of enterprise, new apartments and new railways. First of all, projects are not ready and it is too early to give information on how much money will be spend on each of those 4 projects.