Mongolia

Persisting high levels of inflation have placed our short-term political risk rating for Mongolia under the spotlight, and we note that a further downgrade to the 'social stability' component of our rating could be on the cards (we lowered the social stability score to 57.5 from 67.5 out of 100 in September). Headline consumer price inflation rose to 10.5% year-on-year (y-o-y) in September from 9.0% previously in Mongolia, having previously fallen from 10.1%. Although we expect global commodity prices to continue to ease inflationary pressures, with headline real GDP growth coming in at over 20% y-o-y in Q311, we note that demand-pull inflationary pressures are likely to remain pronounced for the time being.

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