Macro-economic Impacts of the COVID-19 Pandemic on Mongolia’s Economy: CGE Analysis with the GTAP 10a Data Base

This paper evaluates macro-economic impacts of the various policy measures implemented by governments in response to the worldwide COVID-19 pandemic by employing the standard GTAP Model and Data Base 10a, with Mongolia as the focus area. The simulation results demonstrate that Mongolia’s real economy would witness a 4.9% contraction, which is relatively compatible with the actual rate of -4.6% in 2020. All components of the welfare indicator are negative, and the country’s total welfare losses would equal $772.2 million. Most welfare deficits are associated with productivity drops followed by the terms of trade in goods and services and allocative efficiency losses. Also, both merchandise exports and imports decline along with worsening of the terms of trade. The pandemic triggers output drops for almost all sectors in Mongolia, including its major industry—the extractive sector. A few industries, such as textiles, other foods, and apparel, would experience output growths despite the pandemic shocks. However, the low self-sufficiency rates of these industries would undermine their output expansions during a prolonged pandemic, such as COVID-19. The Mongolian government’s stimulus packages to minimize the negative impacts of the pandemic on its economy have had positive effects on households by supporting consumption. However, unskilled labor has been the most vulnerable group during the pandemic, so it is desirable to implement targeted programs over universal stimuluses.