The economic rebound in recent quarters has been stronger than expected and the economy is showing signs of overheating. These signs are show up in rising inflation, especially of those goods and services which are in strong demand, but cannot easily be imported or whose local supply cannot readily be increased to meet the growing demand. GDP growth reached 20.8 percent year-on-year (yoy) in Q3, following an outturn of 17.3 percent in Q2. Growth for the year as a whole will likely hit 15 percent, if not more, up from 6.4 percent in 2010, and is being pushed by infrastructure spending as Mongolia develops its vast mineral wealth.
Mining and manufacturing output are both rising at a healthy rate but there are growing fears of another construction bubble similar to the previous boom in 2004-08. Unemployment is trending down, but overall levels remain high at around 9 percent and October survey results from selected informal labor markets indicate that, on average, real wages have fallen (due to inflation) since the July survey. Almost half of those surveyed indicated that their earnings did not meet their basic needs, which confirms the negative impact of inflation on the poor.