Mongolia’s Coal Cliffhanger and the Inflation Surge

Just months ago, Mongolia's economic engine roared, fueled by coal. Now, a sudden chill has descended. China's deflationary winds, combined with a domestic inflation surge, is testing its economic resilience.

The specter of rising inflation, coupled with the sharp decline in coal export earnings, paints a concerning picture. The Finance Minister's cautious optimism offers a semblance of stability; however, the fundamental weaknesses remain clear.

The Bank of Mongolia's decision to raise the benchmark interest rate to 12% underscores the severity of the inflationary pressures. The projected 10.1% inflation rate for the first quarter of 2025, significantly higher than previous forecasts, is a stark reminder of the challenges ahead.

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