Socio-economic recovery from the Covid-19 pandemic: Macroeconomic impacts and policy issues in Mongolia

This paper examines macroeconomic impacts of Covid-19 and policy issues for recovery in Mongolia, a developing and commodity-exporting economy, by estimating a Bayesian structural vector autoregression on quarterly data. Our estimates suggest that China’s GDP and copper price shocks respectively account for three-fifths and one-fifths of the drop in real GDP in 2020Q1. The recovery observed for 2020Q2-2021Q1 is also primarily due to positive shocks to the variables. However, the ‘W-shaped’ recovery is now expected instead of ‘V-shaped’ due to the domestic outbreak of Covid-19, leading to domestic adverse shocks. The paper also provides policy recommendations for sustainable, inclusive, and resilient recovery from the Covid-19 pandemic.