## 1mngea2022001 - Section 1

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---

### Summary of mission outcomes and priority recommendations
- Mission: remote technical assistance (TA) mission from March 1 to 12, 2021 to help the National Statistics Office of Mongolia (NSOM) compile a monthly indicator of economic activity (MIEA). Experimental results cover January 2010 to January 2021 and assess COVID-19 impacts.
- Funding: IMF's Data for Decisions trust fund (D4D).
- Purpose of MIEA: provide a timely signal of economic activity that complements quarterly and annual national accounts (NA) and is consistent with the System of National Accounts framework.
- Progress since prior mission (September 2019): NSOM implemented prior recommendations at a slow pace. Reasons cited: understaffing, priority changes toward GDP rebase, and pending budgetary allocations.
- Three key work areas targeted by this TA:
  - Assessment and organization of source data: source data examined represent approximately 72 percent of GDP (monthly indicators) and 16 percent of GDP (quarterly indicators). The remaining 12 percent accounts for Agriculture, forestry and fishing industrial sector, primarily derived from annual sources and allocated across the year. Mission helped create a database of source data inputs to ensure clarity and repeatability.
  - Development of a framework to prepare experimental MIEA estimates aligned to quarterly GDP by production (QGDPP) estimates at constant prices. Framework computes both unadjusted and seasonally adjusted estimates consistent with QGDPP. Extreme movements from COVID-19 initially modelled and to be reviewed as more data become available.
  - Improvement and standardization of seasonal adjustment practices, including using internal benchmarking within seasonal adjustment software to equate raw and seasonally adjusted time series on an annual basis.
- Major caveats for experimental MIEA: volatility at year-end from quarterly GDP estimates for Agriculture, Forestry and Fishing, and Construction; selection of suitable method to seasonally adjust overall GDP.
- Priority recommendations:
  - Target Date: November 2021 — Improve monthly allocation of quarterly and/or annual output within the Agriculture, forestry and fishing industrial sector. Responsible: NSOM
  - Target Date: July 2022 — Implement updated seasonal adjustment practices within the computation framework for the MIEA. Responsible: NSOM
  - Target Date: Second half of 2022 — Begin to produce unadjusted and seasonally adjusted MIEA results with accompanying sources and methods documentation. Responsible: NSOM

### A. Indicator series evaluation — findings and recommended actions
- Findings:
  - Primary MIEA data sources are shared with QGDPP program; many QGDPP inputs are monthly and can be extended to MIEA with added seasonal adjustment.
  - Source coverage breakdown:
    - Monthly indicators: approximately 72 percent of GDP
    - Quarterly indicators: approximately 16 percent of GDP
    - Remainder (Agriculture, forestry and fishing industrial sector): approximately 12 percent of GDP, primarily from annual sources and allocated across the year
  - Agriculture, forestry and fishing sector:
    - Quarterly indicator series require refinement due to extreme movements between Q4 and Q1 in unadjusted QGDPP constant price estimates, causing difficulties in interpolation to monthly estimates.
    - Pro-rating quarterly outputs equally across months within a quarter should not be used because it allocates all within-quarter movements to the first month.
    - NSOM indicated possible monthly data from the Department of Agriculture, but not provided during mission.
    - NSOM and mission adopted an experimental monthly structure based on Harvest, hay, fodder reports, sown area reports, Agriculture baseline surveys, price data of agriculture products, livestock censuses, Livestock offspring reports, and Expert judgment.
    - Mission recommended NSOM refine coefficients for pro-rata allocation and use estimates in benchmarking models to smooth year-end movements.
  - Allocation coefficients (Table 2: Quarterly and Monthly Coefficient to Allocate Output of Crops and Livestock):
    - Quarterly Distribution of Annual: Q1 0.05, Q2 0.41, Q3 0.44, Q4 0.10
    - Monthly Distribution of Quarterly:
      - M1 0.17
      - M2 0.25
      - M3 0.58
      - M4 0.2
      - M5 0.32
      - M6 0.48
      - M7 0.34
      - M8 0.33
      - M9 0.33
      - M10 0.38
      - M11 0.35
      - M12 0.27
    - Source: NSOM and mission’s calculations.
  - Industrial sectors covered by IPI (Mining, manufacturing, electricity, and gas): monthly volume indices are well developed and comply with international IPI standards; indicators shared with QGDPP and disseminated unadjusted and seasonally adjusted. Noted unexplained spike in manufacturing volume index at end of each quarter.
  - Construction sector: requires refinement to estimate monthly. Lack of composite monthly indicator and extreme Q4–Q1 movements produce poor interpolation. Potential year-end reporting issues may misattribute activity.
  - Trade turnover: total trade turnover now available monthly from the January 2017 reference month onward; continuation will enable more robust seasonal factors. Further methodological improvements such as deflating disaggregated components would improve quality.
  - Service sectors estimated with monthly employment figures (Public Administration and Defense, Education, Human Health and social work): need updating with constant price estimates. Employment statistics are adequate volume indicators where gross value added is largely wages, salaries, and employers’ social contributions.
  - Other industrial sectors without monthly information represent approximately 6 percent of GDP (excluding real estate). Mission interpolated QGDPP estimates for inclusion in MIEA. For real estate (ISIC code 681), NSOM should replicate QGDPP assumptions, methods, and source data monthly.
  - NSOM will release a new base year GDP series from 2015 onward in 2021. NSOM requested IMF support for back-casting to expand series back to 2010.
- Recommended actions:
  - Update the base year for indicator series in the MIEA for consistency across NA programs.
  - Improve monthly allocation of quarterly and/or annual output within the Agriculture, forestry, and fishing industrial sector.
  - Investigate spike in volume index for the manufacturing sector at the end of each quarter.
  - Seek external assistance for preparing monthly indicator based on improved quarterly estimates for construction in QGDPP program.

### B. MIEA framework — development and best practices
- Framework developed combines monthly indicator series with quarterly benchmark information from QGDPP to produce both unadjusted and seasonally adjusted monthly economic activity estimates for each ISIC sector that are consistent with QGDPP.
- Framework can be used to store or populate a real-time (vintage) database to assess stability of estimates over time. Best practice: create, maintain and publish a database of real-time (release vintage) data to facilitate revisions analyses.
- Summary sources and methods documentation prepared to aid NA compilers and users.

### C. Seasonal adjustment practices — implementation and guidance
- Findings and actions implemented:
  - Mission implemented direct seasonal adjustment of total GDP consistent with NSOM practice (total quarterly GDP directly seasonally adjusted). Alternative is indirect seasonal adjustment (sum of seasonally adjusted components), which should be free of residual seasonality.
  - Observation: many industrial sectors have distinct seasonal patterns which can be overshadowed when aggregated.
  - Mission recommended equating unadjusted and seasonally adjusted data on an annual basis within seasonal adjustment processes for MIEA and QGDPP. NSOM previously equated these outside seasonal adjustment, causing step adjustments in the first period of the year; mission implemented equating within seasonal adjustment as good practice.
  - COVID-19 adjustments: extreme movements in 2020–2021 coded as additive outliers so their values are allocated to the irregular component and excluded from seasonal and trend components. These additive outliers should be reviewed as more observations become available; possible future treatments include level shifts or temporary changes.
- Recommended actions:
  - Develop a workplan to prepare main users for a future transition of headline economic measures from unadjusted to seasonally adjusted data/estimates for all economic series, including QGDPP and MIEA.
  - Use internal benchmarking functionalities within the seasonal adjustment software used in NSOM to equate unadjusted and seasonally adjusted results on an annual basis.
  - Review treatment of outliers and seasonal adjustment models, including COVID-19 impacts as part of a follow-up mission.
  - Investigate whether residual seasonality remains in total GDP.

### Detailed recommendations and action plan (Table 3 summary)
- Priority Action/Milestone and Target Completion Dates:
  - Medium: Develop a workplan to prepare users for a transition of headline economic measures from unadjusted to seasonally adjusted data/estimates for all economic series, including QGDPP and MIEA. Target Completion Date: July 2022.
  - High: Review treatment of outliers and seasonal adjustment models, including COVID-19 impacts as part of a follow-up mission. Target Completion Date: July 2022.
  - Medium: Update the base year within the indicator series in the MIEA for consistency across NA programs. Target Completion Date: October 2021.
  - Medium: Investigate spike in the volume index for the manufacturing sector at the end of each quarter. (Target Completion Date not provided in supplied excerpt.)

_Prepared by Craig Kavanagh; Report on the High Frequency Indicators Mission (March 1–12, 2021); IMF Country Report No. 22/142 (May 2022)._

### 1mngea2022001 - Section 2

### Recent action items and timeline
- October 2021
  - High: Improve monthly allocation of quarterly and/or annual output within the Agriculture, forestry and fishing industrial sector.
- November 2021
  - Medium: Seek external assistance for preparing monthly indicator based on improved quarterly estimates for construction in QGDPP program.
- November 2021
  - Medium: Use internal benchmarking functionalities within seasonal adjustment software used in the NSOM to equate unadjusted and seasonally adjusted results on an annual basis.
- December 2021
  - Medium: Investigate whether residual seasonality remains in the total GDP.
- December 2021
  - High: Begin to produce both unadjusted and seasonally adjusted MIEA results with accompanying sources and methods documentation.
- Second half of 2022
  - Timing indicated for further work related to producing MIEA outputs and documentation.

### Implementation status of previous recommendations
- Recommendation: Agree on the feasibility of developing a MIEA and assign responsibilities to implement the project.
  - Target Completion Date: December 2019
  - Comments: In-progress: Feasibility of development was agreed on, however dedicated resources to implement the project were not implemented.
- Recommendation: Develop a dedicated database with all available high-frequency data, and lower-frequency benchmarks with appropriate classifications and metadata.
  - Target Completion Date: March 2020
  - Comments: Ongoing
- Recommendation: Elaborate an experimental MIEA (partial information), a detailed workplan, and timeline to develop missing components.
  - Target Completion Date: June 2020
  - Comments: Completed. The March 2021 mission an experimental MIEA.
- Recommendation: Develop additional monthly indicators using available data sources and replicating methods used quarterly.
  - Target Completion Date: Pending
  - Comments: (No additional comment provided)

### Additional implementation considerations
- Recommendation: Consider the implications of the new base year and the possible changes to the revision policy in the potential work related to the MIEA.
  - Target Completion Date: (not specified)
  - Comments: In-Progress: The NSOM requested external support on backcasting to prepare longer time series suitable for the MIEA within the GDP rebase.

### Officials met during the mission
- Mr. Demberel Ayush — Director, National Accounts and Statistical Research Department (NASRD)
- Ms. Erdenesaan Eldev-Ochir — Director, Economic statistics department (ESD)
- Mr. Otgonbayar Gantulga — Director, Foreign relations and cooperation division, Administration department
- Ms. Bayarmaa Baatarsuren — Senior Statistician, National Accounts Section, NASRD
- Ms. Oyunbileg Delgersaikhan — Senior statistician, Business Register Section, ESD
- Ms. Oyunjargal Mangalsuren — Senior statistician, Economic statistics section, ESD
- Ms. Ulziikhand Nyamsuren — Senior Statistician, Statistical Research and Sampling Section, NASRD
- Ms. Tserenkhand Jagir — Statistician, National Accounts Section, NASRD
- Ms. Lkham Narantsogt — Statistician, National Accounts Section, NASRD
- Mr. Norovsambuu Oyuntunsag — Statistician, Statistical Research and Sampling Section, NASRD
- Mr. Davaajargal Davaatseren — Statistician, Household income and expenditure survey section, Population and social statistics department
- Mr. Gerelt-Od — Statistician, NASRD

_Source: 1mngea2022001 - Section 2_

### Section 1

### 1mngea2022001 - Section 1

### Summary of mission outcomes and priority recommendations
- Mission: remote technical assistance (TA) mission from March 1 to 12, 2021 to help the National Statistics Office of Mongolia (NSOM) compile a monthly indicator of economic activity (MIEA). Experimental results cover January 2010 to January 2021 and assess COVID-19 impacts.
- Funding: IMF's Data for Decisions trust fund (D4D).
- Purpose of MIEA: provide a timely signal of economic activity that complements quarterly and annual national accounts (NA) and is consistent with the System of National Accounts framework.
- Progress since prior mission (September 2019): NSOM implemented prior recommendations at a slow pace. Reasons cited: understaffing, priority changes toward GDP rebase, and pending budgetary allocations.
- Three key work areas targeted by this TA:
  - Assessment and organization of source data: source data examined represent approximately 72 percent of GDP (monthly indicators) and 16 percent of GDP (quarterly indicators). The remaining 12 percent accounts for Agriculture, forestry and fishing industrial sector, primarily derived from annual sources and allocated across the year. Mission helped create a database of source data inputs to ensure clarity and repeatability.
  - Development of a framework to prepare experimental MIEA estimates aligned to quarterly GDP by production (QGDPP) estimates at constant prices. Framework computes both unadjusted and seasonally adjusted estimates consistent with QGDPP. Extreme movements from COVID-19 initially modelled and to be reviewed as more data become available.
  - Improvement and standardization of seasonal adjustment practices, including using internal benchmarking within seasonal adjustment software to equate raw and seasonally adjusted time series on an annual basis.
- Major caveats for experimental MIEA: volatility at year-end from quarterly GDP estimates for Agriculture, Forestry and Fishing, and Construction; selection of suitable method to seasonally adjust overall GDP.
- Priority recommendations (Table 1):
  - Target Date: November 2021 — Improve monthly allocation of quarterly and/or annual output within the Agriculture, forestry and fishing industrial sector. Responsible: NSOM
  - Target Date: July 2022 — Implement updated seasonal adjustment practices within the computation framework for the MIEA. Responsible: NSOM
  - Target Date: Second half of 2022 — Begin to produce unadjusted and seasonally adjusted MIEA results with accompanying sources and methods documentation. Responsible: NSOM

### A. Indicator series evaluation — findings and recommended actions
Findings:
- Primary MIEA data sources are shared with QGDPP program; many QGDPP inputs are monthly and can be extended to MIEA with added seasonal adjustment.
- Source coverage breakdown:
  - Monthly indicators: approximately 72 percent of GDP
  - Quarterly indicators: approximately 16 percent of GDP
  - Remainder (Agriculture, forestry and fishing industrial sector): approximately 12 percent of GDP, primarily from annual sources and allocated across the year
- Agriculture, forestry and fishing sector:
  - Quarterly indicator series require refinement due to extreme movements between Q4 and Q1 in unadjusted QGDPP constant price estimates, causing difficulties in interpolation to monthly estimates.
  - Pro-rating quarterly outputs equally across months within a quarter should not be used because it allocates all within-quarter movements to the first month.
  - NSOM indicated possible monthly data from the Department of Agriculture, but not provided during mission.
  - NSOM and mission adopted an experimental monthly structure based on Harvest, hay, fodder reports, sown area reports, Agriculture baseline surveys, price data of agriculture products, livestock censuses, Livestock offspring reports, and Expert judgment.
  - Mission recommended NSOM refine coefficients for pro-rata allocation and use estimates in benchmarking models to smooth year-end movements.
- Table of allocation coefficients (Table 2: Quarterly and Monthly Coefficient to Allocate Output of Crops and Livestock)
  - Quarterly Distribution of Annual: Q1 0.05, Q2 0.41, Q3 0.44, Q4 0.10
  - Monthly Distribution of Quarterly:
    - M1 0.17
    - M2 0.25
    - M3 0.58
    - M4 0.2
    - M5 0.32
    - M6 0.48
    - M7 0.34
    - M8 0.33
    - M9 0.33
    - M10 0.38
    - M11 0.35
    - M12 0.27
  - Source: NSOM and mission’s calculations.
- Industrial sectors covered by IPI (Mining, manufacturing, electricity, and gas): monthly volume indices are well developed and comply with international IPI standards; indicators shared with QGDPP and disseminated unadjusted and seasonally adjusted. Noted unexplained spike in manufacturing volume index at end of each quarter.
- Construction sector: requires refinement to estimate monthly. Lack of composite monthly indicator and extreme Q4–Q1 movements produce poor interpolation. Potential year-end reporting issues may misattribute activity.
- Trade turnover: total trade turnover now available monthly from the January 2017 reference month onward; continuation will enable more robust seasonal factors. Further methodological improvements such as deflating disaggregated components would improve quality.
- Service sectors estimated with monthly employment figures (Public Administration and Defense, Education, Human Health and social work): need updating with constant price estimates. Employment statistics are adequate volume indicators where gross value added is largely wages, salaries, and employers’ social contributions.
- Other industrial sectors without monthly information represent approximately 6 percent of GDP (excluding real estate). Mission interpolated QGDPP estimates for inclusion in MIEA. For real estate (ISIC code 681), NSOM should replicate QGDPP assumptions, methods, and source data monthly.
- NSOM will release a new base year GDP series from 2015 onward in 2021. NSOM requested IMF support for back-casting to expand series back to 2010.

Recommended actions (from section):
- Update the base year for indicator series in the MIEA for consistency across NA programs.
- Improve monthly allocation of quarterly and/or annual output within the Agriculture, forestry, and fishing industrial sector.
- Investigate spike in volume index for the manufacturing sector at the end of each quarter.
- Seek external assistance for preparing monthly indicator based on improved quarterly estimates for construction in QGDPP program.

### B. MIEA framework — development and best practices
- Framework developed combines monthly indicator series with quarterly benchmark information from QGDPP to produce both unadjusted and seasonally adjusted monthly economic activity estimates for each ISIC sector that are consistent with QGDPP.
- Framework can be used to store or populate a real-time (vintage) database to assess stability of estimates over time. Best practice: create, maintain and publish a database of real-time (release vintage) data to facilitate revisions analyses.
- Summary sources and methods documentation prepared to aid NA compilers and users.

### C. Seasonal adjustment practices — implementation and guidance
Findings and actions implemented:
- Mission implemented direct seasonal adjustment of total GDP consistent with NSOM practice (total quarterly GDP directly seasonally adjusted). Alternative is indirect seasonal adjustment (sum of seasonally adjusted components), which should be free of residual seasonality.
- Observation: many industrial sectors have distinct seasonal patterns which can be overshadowed when aggregated.
- Mission recommended equating unadjusted and seasonally adjusted data on an annual basis within seasonal adjustment processes for MIEA and QGDPP. NSOM previously equated these outside seasonal adjustment, causing step adjustments in the first period of the year; mission implemented equating within seasonal adjustment as good practice.
- COVID-19 adjustments: extreme movements in 2020–2021 coded as additive outliers so their values are allocated to the irregular component and excluded from seasonal and trend components. These additive outliers should be reviewed as more observations become available; possible future treatments include level shifts or temporary changes.

Recommended actions (from section):
- Develop a workplan to prepare main users for a future transition of headline economic measures from unadjusted to seasonally adjusted data/estimates for all economic series, including QGDPP and MIEA.
- Use internal benchmarking functionalities within the seasonal adjustment software used in NSOM to equate unadjusted and seasonally adjusted results on an annual basis.
- Review treatment of outliers and seasonal adjustment models, including COVID-19 impacts as part of a follow-up mission.
- Investigate whether residual seasonality remains in total GDP.

### Detailed recommendations and action plan (Table 3 summary)
- Priority Action/Milestone and Target Completion Dates:
  - Medium: Develop a workplan to prepare users for a transition of headline economic measures from unadjusted to seasonally adjusted data/estimates for all economic series, including QGDPP and MIEA. Target Completion Date: July 2022.
  - High: Review treatment of outliers and seasonal adjustment models, including COVID-19 impacts as part of a follow-up mission. Target Completion Date: July 2022.
  - Medium: Update the base year within the indicator series in the MIEA for consistency across NA programs. Target Completion Date: October 2021.
  - Medium: Investigate spike in the volume index for the manufacturing sector at the end of each quarter. (Target Completion Date not provided in supplied excerpt.)

*Prepared by Craig Kavanagh; Report on the High Frequency Indicators Mission (March 1–12, 2021); IMF Country Report No. 22/142 (May 2022).*

### Section 2

### 1mngea2022001 - Section 2

### Recent action items and timeline
- October 2021
  - High: Improve monthly allocation of quarterly and/or annual output within the Agriculture, forestry and fishing industrial sector.
- November 2021
  - Medium: Seek external assistance for preparing monthly indicator based on improved quarterly estimates for construction in QGDPP program.
- November 2021
  - Medium: Use internal benchmarking functionalities within seasonal adjustment software used in the NSOM to equate unadjusted and seasonally adjusted results on an annual basis.
- December 2021
  - Medium: Investigate whether residual seasonality remains in the total GDP.
- December 2021
  - High: Begin to produce both unadjusted and seasonally adjusted MIEA results with accompanying sources and methods documentation.
- Second half of 2022
  - (Timing indicated for further work related to producing MIEA outputs and documentation.)

### Implementation status of previous recommendations (Table 4)
- Recommendation: Agree on the feasibility of developing a MIEA and assign responsibilities to implement the project.
  - Target Completion Date: December 2019
  - Comments: In-progress: Feasibility of development was agreed on, however dedicated resources to implement the project were not implemented.
- Recommendation: Develop a dedicated database with all available high-frequency data, and lower-frequency benchmarks with appropriate classifications and metadata.
  - Target Completion Date: March 2020
  - Comments: Ongoing
- Recommendation: Elaborate an experimental MIEA (partial information), a detailed workplan, and timeline to develop missing components.
  - Target Completion Date: June 2020
  - Comments: Completed. The March 2021 mission an experimental MIEA.
- Recommendation: Develop additional monthly indicators using available data sources and replicating methods used quarterly.
  - Target Completion Date: Pending
  - Comments: (No additional comment provided)

### Additional implementation considerations (Table 5)
- Recommendation: Consider the implications of the new base year and the possible changes to the revision policy in the potential work related to the MIEA.
  - Target Completion Date: (not specified)
  - Comments: In-Progress: The NSOM requested external support on backcasting to prepare longer time series suitable for the MIEA within the GDP rebase.

### Officials met during the mission
- Mr. Demberel Ayush — Director, National Accounts and Statistical Research Department (NASRD)
- Ms. Erdenesaan Eldev-Ochir — Director, Economic statistics department (ESD)
- Mr. Otgonbayar Gantulga — Director, Foreign relations and cooperation division, Administration department
- Ms. Bayarmaa Baatarsuren — Senior Statistician, National Accounts Section, NASRD
- Ms. Oyunbileg Delgersaikhan — Senior statistician, Business Register Section, ESD
- Ms. Oyunjargal Mangalsuren — Senior statistician, Economic statistics section, ESD
- Ms. Ulziikhand Nyamsuren — Senior Statistician, Statistical Research and Sampling Section, NASRD
- Ms. Tserenkhand Jagir — Statistician, National Accounts Section, NASRD
- Ms. Lkham Narantsogt — Statistician, National Accounts Section, NASRD
- Mr. Norovsambuu Oyuntunsag — Statistician, Statistical Research and Sampling Section, NASRD
- Mr. Davaajargal Davaatseren — Statistician, Household income and expenditure survey section, Population and social statistics department
- Mr. Gerelt-Od — Statistician, NASRD

*Source: 1mngea2022001 - Section 2*

---


_Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1mngea2022001.pdf_