The National Statistics Committee releases its latest business demographic statistics, revealing that the level of business downtime reaches its highest point in the last five years. Many businesses in Mongolia are closing or unable to continue their operations. What factors contribute to this troubling trend?
🤔 Decline in Business Activity
In the past year, the activity rate of newly established businesses across Mongolia's 4 key sectors—industry, construction, trade, and transportation—drops by 1.8 percentage points from the previous year, now standing at 20.7%. This decline reflects a challenging business environment where new entrepreneurs frequently encounter issues related to taxation and financing. To foster growth in these sectors, it is crucial to enhance the overall business climate.
🔒 Closed For a Reason
Moreover, 2023 marks a concerning peak in operational outages across key industries, with a rate of 1.5%, the highest in 5 years. This surge results from various factors, including decreased demand, rising inflation, increased costs, financial challenges, heightened competition, and the impact of government policies. Currently, only 36.9% of registered enterprises maintain stable operations, while the rate of closures continues to rise.
The decline in new business growth and rising shutdowns across Mongolia's primary sectors signal a pressing need for reform. Addressing tax policies, enhancing the legal environment, and providing targeted support for specific industries prove essential to revitalizing the business landscape and promoting sustainable economic growth.
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