A Business Environment Survey is Underway

In 2008 world’s major stock exchanges underperformed against their plans and projections. The prices of our major export commodities – gold and copper – have been volatile too. Past June gold cost 889.9 USD per ounce and slid to 849 USD as of January 21, 2009. Copper price has been under a much harsher attack.
Countries reduce interest rates and take a host of measures to mitigate effects on people. Yet, no effects of these measures are being seen. I will cite a few indicators to depict Mongolia’s situation.
We trace a sharp decline in the quarterly rates of our key economic indicator, the GDP rate -  the recorded 8.9 GDP is already a substantial decline from the levels of 2006-2007.
On foreign trade front we incurred a deficit equal to 1.1 billion MNT. Certain factors did have a play here. The budget revenue plan for 2008 was cut by 50% or 354.5 billion MNT. This included major tax revenues. Copper and gold prices plunged. On the other hand, savings denominated in MNT reduced and the ones in USD increased. Mongolian National Tugrug depreciated against euro, USD and yuan. Capital markets shrunk and FDI reduced.
Imports remain expensive. Under such tense circumstances, we have to wrestle with the inflation. World oil price factors inflation rate in Mongolia. Fuel shortage drove oil prices up on the global markets and this props up inflation in Russia and China, our two major sources of imports. Russia recorded about 23% inflation in 2008. In China food prices increased by 15%, thus contaminating Mongolian exports.
Accuracy and objectivity of information and data released by the official statistics organization is crucial in forging ways out of crisis. Therefore, in 2009 we will focus our prime attention on the quality of our products. We must shift to a wider scope of operations. Some of the quarterly reported data must be developed and publicized on a monthly basis at the times of crisis. In addition, it is pivotally important that we produce estimates, projections and forecasts for GDP, inflation on quarterly and annual bases.
Another action that we are planning is to forecast business environment changes on a yearly basis. Such practices exist in some countries. This would be an important work, extremely helpful to our businesses especially in a crisis. Tendencies, probabilities and changes are important ingredients for business planning and management. We will, thus, have incurred smaller losses and fewer mistakes. A sample survey on business environment tendencies is, therefore, one of our major targets.