Mongolia Faces Economic Winter

Mongolia is in the depths of an unusually harsh winter that is decimating livestock and sending temperatures to minus 56 degrees Celsius. But an economic winter has also hit people like factory owner Jargalsaikhan.

The 40-year-old once thought Mongolia’s economic boom would last more than a decade. He had had ambitious plans for the cement factory he started eight years ago, thinking that bank lending will keep flowing, CNA reported.

Then, the Mongolian economy collapsed, and his factory can barely survive now.

In 2011, riding on the global mining boom, Mongolia’s economy expanded by a whopping 17.3%. But the economy crashed just as quickly as it expanded.

The World Bank estimates that Mongolia’s economic growth will further slow to just 0.7% this year, from 2.3% in 2015.

Mongolia’s currency, the tugrik, has also plummeted nearly 12% against the dollar this year. The economic crisis was caused by a collapse in commodity prices, mounting debt and years of off-budget spending.

But since coming to power in June, the Mongolian People’s Party has announced an economic reform plan containing spending cuts. They have also asked the International Monetary Fund for help. The country’s foreign minister has said he is confident an agreement with the IMF would be in place by February.

IMF aid could ease financial concerns for the country, as Mongolia will have to repay $1 billion in debt by 2018.

While the country awaits a bailout from the IMF, there are fears that many Mongolians could risk being dragged below the poverty line again as the economy sinks. The country’s unemployment rate jumped to 8.3% in the final quarter of 2015, from 6.3% a quarter earlier.