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Economy

Mongolia, How The "Switch To Austerity” Sparked A National Uprising

The Asian country is experiencing record inflation and soaring food costs as imports dry up due to the pandemic and Russia’s invasion of Ukraine.

Mongolia, How The "Switch To Austerity” Sparked A National Uprising

Protesters gathered in April outside the Government Palace in SukhbaatarSquare, Ulaanbaatar, to demand lawmakers stop the increasing costs of basic goods.

Nansalmaa Oyunchimeg, Myagmarsuren Battur

ULAANBAATAR — In the shadows of an immense statue of Chinggis Khaan, the founder of the Mongol empire, thousands gather. They stand outside the Government Palace to demand officials remedy the ever-increasing cost of living.

A young demonstrator holds up a mirror, asking if Mongolian government officials can bear to look themselves in the face, while others chant “Do your job” during the two-day dissent in April. The protest signals a breaking point for citizens who struggle to keep up with rising costs. They accuse the government of neglecting its duty to remedy the situation and forcing people to consider fleeing the country.


Two months after the administration approved its highest-ever total spending budget of 18.2 trillion Mongolian togrog (MNT) ($5.9 billion), officials called on citizens to “switch to austerity.” The move angered many already reeling from the coronavirus pandemic and the conflict in Ukraine, both of which have affected the flow of goods into the country.

Record high inflation 

Neighboring China — Mongolia’s biggest import partner — closed its border in January 2020 in the wake of the pandemic, hindering supply chains and forcing prices up. Now, the supply chain of goods into the country has taken another hit following Russia’s invasion of Ukraine. Exports out of Russia have halted, and Mongolia has lost access to the once-steady flow of cereals, oils, dairy products and sugar from its second-biggest import partner.

Mongolians are grappling with a record rise in inflation from 2.4% in January 2021 to 14.6% in the same month this year. Surging inflation and rising prices are expected to continue throughout the year. More social unrest could follow, in a situation that looks graver every day.

The rising cost of living is felt acutely in many of the country’s food stores, where shoppers each week can afford less to feed themselves and their families.

“Some Mongolians buy half of their bread, while others do not even have enough bread to eat a day,” says Oyunbileg Dorjsuren, a saleswoman at Bileg grocery store, in the Sukhbaatar district of the capital, Ulaanbaatar.

Everyday costs — such as gasoline, up 55%, along with meat and vegetables — are increasingly difficult to fund in a country where the average monthly wage has risen only 8%, putting a mere 110,100 MNT ($36) extra into the monthly pay packets of most Mongolians.

The impacts of sharply reduced imports are felt throughout the economy, says Dovuuch Manibadar, a professor of economics at Otgontenger University in Ulaanbaatar, the capital. “It is a big shock. It certainly reflects in many ways, such as rising foreign exchange rates, unemployment, inflation and declining budget revenues.”

Ariuntuya Buuveibaatar browses for grapes at a store in Khan-Uul, Ulaanbaatar.

Nansalmaa Oyunchimeg, GPJ Mongolia

Protesters with empty stomachs

In response to the financial hardship, thousands turned out in April to demonstrate in Ulaanbaatar’s Sukhbaatar Square, claiming that while they are being told to “switch to austerity,” the same can’t be said for government officials who hadn’t cut spending.

Some employers gave their workers paid leave to join the demonstration, while university professors allowed their students to skip class so they could demonstrate. The tone was patriotic, with many demanding action so that they wouldn’t be forced to leave their country in search of higher wages.

Joining them was Ankhbayar Erdenebayar, who runs a private fitness center which has lost more than 20 million MNT ($6,440) due to coronavirus shutdowns.

“I do not want to leave my daughter in such a society; I want to save my future,” says Ankhbayar, who demonstrated for two days outside the Government Palace, holding a sign that read, “I want to live in my homeland.”

I’m ready to march again if the previous protests do not work

Saruul Baatarbileg was also at the demonstration. She works as a barista in a coffee shop but says she can barely afford to feed herself due to the sharp rise in food prices. “While I’m still young, I want to work in my home country, but my country tells me to become a beggar,” she says. “This can’t be happening.”

People demonstrated into the night until they were dispersed by police armed with shields and batons at around 3 a.m. Twenty people were arrested amid reports of vandalism on state-owned property. Faced with an even bigger crowd in the central square the following day, the government called an extraordinary meeting, after which Prime Minister Oyun-Erdene Luvsannyam announced a step toward amending the 2022 budget to ease the economic burden on households.

After the prime minister’s statement, most of the more than 4,000 young people who had gathered in Ulaanbaatar’s central square dispersed peacefully.

A close eye

On May 5, the State Great Hural, Mongolia’s parliament, announced it had amended its budget to trim total expenditures by 300 billion MNT ($96 million) to 17.9 trillion MNT ($5.7 billion) and announced certain foods, such as vegetable oil and sugar, would be exempt from taxes until the end of the year.

The government should next work with the private sector, says Dulguun Baasandavaa, advisor to the Ministry of Economy and Development and former deputy chairperson of the National Development Agency.

“We have a lot to do together,” Dulguun says. “There are ample opportunities for cooperation between the government and the private sector. We have to do what we have to do in society with the help of taxes.”

But if the government fails to ease the economic burden on Mongolians, many demonstrators say they are prepared to take to the streets again.

Tsend-Ayush Tumenjargal, who joined the demonstration on the second day, helped create a list of demands to submit to the government, including reducing inflation, government spending and social security contributions. He’s one of many who plan to keep a close eye on how the government reacts.

“I’m ready to march again if the previous protests do not work,” he says.

Nansalmaa Oyunchimeg is a Global Press Journal reporter based in Mongolia.

Myagmarsuren Battur is a Global Press Journal reporter based in Mongolia.


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Future

Livestream Shopping Is Huge In China — Will It Fly Elsewhere?

Streaming video channels of people shopping has been booming in China, and is beginning to win over customers abroad as a cheap and cheerful way of selling products to millions of consumers glued to the screen.

A A female volunteer promotes spring tea products via on-line live streaming on a pretty mountain surrounded by tea plants.

In Beijing, selling spring tea products via on-line live streaming.

Xinhua / ZUMA
Gwendolyn Ledger

SANTIAGOTikTok, owned by Chinese tech firm ByteDance, has spent more than $500 million to break into online retailing. The app, best known for its short, comical videos, launched TikTok Shop in August, aiming to sell Chinese products in the U.S. and compete with other Chinese firms like Shein and Temu.

Tik Tok Shop will have three sections, including a live or livestream shopping channel, allowing users to buy while watching influencers promote a product.

This choice was strategic: in the past year, live shopping has become a significant trend in online retailing both in the U.S. and Latin America. While still an evolving technology, in principle, it promises good returns and lower costs.

Chilean Carlos O'Rian Herrera, co-founder of Fira Onlive, an online sales consultancy, told América Economía that live shopping has a much higher catchment rate than standard website retailing. If traditional e-commerce has a rate of one or two purchases per 100 visits to your site, live shopping can hike the ratio to 19%.

Live shopping has thrived in China and the recent purchases of shopping platforms in some Latin American countries suggests firms are taking an interest. In the United States, live shopping generated some $20 billion in sales revenues in 2022, according to consultants McKinsey. This constituted 2% of all online sales, but the firm believes the ratio may become 20% by 2026.

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