The National Statistics Office (NSO) and World Bank released the Poverty Profile 2016 study on October 17 to provide up-to-date information on poverty to all policy and decision makers and provide a reference material for researchers and academicians studying Mongolia’s poverty, economics and social development.
The results of the study show that in 2016, the incidence of poverty in Mongolia stood at 29.6 percent, which means about 907,500 individuals are living in poverty. In other words, 30 out of every 100 Mongolians cannot afford to buy essential food and non-food items. Compared to 2014, the population of people living in poverty rose by 273,500 in 2016.
It was reported in the Poverty Profile 2014 survey that there were 634,000 people who are unable to afford their basic needs at the time. But this index reached 907,500 people in 2016, according to the new study.
Chairwoman of NSO A.Aruinzaya underlined that the survey is one of the nationally representative flagship surveys and that it accurately determines the living standards, the state of poverty and changes in its incidence in Mongolia. She explained that the sudden upsurge in poverty and deterioration of people’s living standards are directly connected to the economic slowdown Mongolia has been experiencing since 2012.
The national economy became stagnant from 2012, and the GDP slightly rose by 2.4 percent in 2015 and by 3.6 in 2016.
The current poverty gap is estimated to be 7.7 percent, which means that the average shortfall in consumption of each person is 7.7 percent of the poverty line if it is assumed that the non-poor have a shortfall of zero. The poverty gap among the poor population is at 26 percent, indicating that the average consumption of the poor falls 26 percent, or by 38,200 MNT, short from the poverty line.
GEOGRAPHICAL DISTRIBUTION OF POVERTY
The Poverty Profile study shows that poverty rate is higher in rural settlements than in urban settlements.
Poverty in urban areas is considerably less with a poverty incidence of 27.1 percent compared to 34.9 percent in rural areas. At the urban level, the incidence of poverty is lower in Ulaanbaatar than in provincial centers. In rural areas, soum centers are less poor than large cities.
Ulaanbaatar and the Central region have the lowest incidences of poverty with 24.8 to 26.8 percent of inhabitants considered poor. The Western, Khangai and Eastern regions top the list with the highest poverty headcounts with up to 43.9 percent of their population being afflicted by poverty.
In terms of poverty distribution, the Western region accounts for 16.5 percent of the poor whilst constituting 13.6 percent of the total population; Khangai region accounts for 20.9 percent of the poor whilst constituting 18.4 percent of the total population; the Central region accounts for 14.1 percent of the poor while constituting 15.5 percent of the population; and Eastern region accounts for 10.7 percent of the poor whilst constituting 7.2 percent of the population.
On the other hand, 45.2 percent of the total population lives in Ulaanbaatar, but 37.8 percent of the residents are reported to be poor. Although the poverty headcount is lowest, specifically 24.8 percent, an alarming number of people, or 343,100, people, are living in poverty in the capital.
The poverty incidence slightly dropped in some regions of Mongolia from 2014 to 2016, according to the study results.
The share of the poor in Khangai region has shown a decrease of 1.3 percentage points compared to the year 2014, while it remains higher than other regions. The share of the poor in the West has decreased by 1.7 percentage points, the Central region by 2.1 percentage points, and the Eastern region decreased by 0.1 percentage points from the two preceding years.
More striking differences are observed in the consumption between poor and non-poor. The average consumption of the non-poor is higher by three times than the average consumption of the poor and the poor on average consumes almost twice as less food as the non-poor. The share of food consumption of the poor is higher to their total consumption, making up 42.3 percent of their consumption.
The wealthier population’s average education expenditure is higher by five times than the poor, while the non-poor population has seven folds higher average health expenditures. The mean heating expenditures and spending on clothing of the non-poor are much higher than that of the poor, but the poor’s expenditure is proportionately higher. The wealthier population devotes four times higher expenditure on transportation and communication than the poor.
AROUND 1.3 MILLION PEOPLE HAVE LOANS
A spokesperson for NSO reported on Tuesday that 42.2 percent of the total population, approximately 1.3 million people, has loans.
In particular, 36.9 percent of loan holders are reported to have taken out salary loans, 21.3 percent have herder’s loans, 20.6 percent have pension loans, nine percent have household consumption loans, 3.4 percent have mortgage loans, 2.8 percent have business loans, and 16.4 percent have other types of loans.
The incidence of poverty monotonically increases with household size. This is hardly surprising when per capita consumption is used as a welfare indicator, which implicitly assumes consumption is shared equally among household members.
According to the survey, the probability of being poor is about three percent if a single person lives in a household, while in households with two members the probability of being poor increases to seven percent. Such households reportedly make up 14 percent of the total population and three percent of the poor.
The poverty incidence in the average size households of three to five members is about 15 to 39 percent. Such households make up 66 percent of the total population and 61 percent of the poor. In contrast, about 49 percent of households with six members, and more than half of those households with seven or more members are poor. They represent only 17 percent of the total population, but make up 29 percent of the poor population. The extreme poor tend to live in households with an average size of eight or more persons, where 68 percent of such household members are living below the poverty line. Such households make up four percent of the total population and eight percent of the poor, the Poverty Profile 2016 report read.