Mongolia: Economy#

Foreign direct investment in Mongolia's extractive industries – which are based on extensive deposits of copper, gold, coal, molybdenum, fluorspar, uranium, tin, and tungsten - has transformed Mongolia's landlocked economy from its traditional dependence on herding and agriculture. Exports now account for more than half of GDP. Mongolia depends on China for more than 60% of its external trade - China receives some 90% of Mongolia's exports and supplies Mongolia with more than one-third of its imports. Mongolia also relies on Russia for 90% of its energy supplies, leaving it vulnerable to price increases. Remittances from Mongolians working abroad, particularly in South Korea, are significant.

Soviet assistance, at its height one-third of GDP, disappeared almost overnight in 1990 and 1991 at the time of the dismantlement of the USSR. The following decade saw Mongolia endure both deep recession, because of political inaction, and natural disasters, as well as strong economic growth, because of market reforms and extensive privatization of the formerly state-run economy. The country opened a fledgling stock exchange in 1991. Mongolia joined the WTO in 1997 and seeks to expand its participation in regional economic and trade regimes.

Growth averaged nearly 9% per year in 2004-08 largely because of high copper prices globally and new gold production. By late 2008, Mongolia was hit by the global financial crisis and Mongolia's real economy contracted 1.3% in 2009. In early 2009, the IMF reached a $236 million Stand-by Arrangement with Mongolia and it emerged from the crisis with a stronger banking sector and better fiscal management. In October 2009, Mongolia passed long-awaited legislation on an investment agreement to develop the Oyu Tolgoi (OT) mine, among the world's largest untapped copper-gold deposits. However, a dispute with foreign investors developing OT called into question the attractiveness of Mongolia as a destination for foreign investment. This caused a severe drop in FDI, and a slowing economy, leading to the dismissal of Prime Minister ALTANKHUYAG in November 2014. The economy had grown more than 10% per year between 2011 and 2013 - largely on the strength of commodity exports and high government spending - before slowing to 7.8% in 2014 and 2.3% in 2015.

The current government has made restoring investor trust and reviving the economy its top priority, but has failed to invigorate the economy in the face of the large drop off in foreign direct investment. Mongolia's economy faces near-term economic risks from the government's loose fiscal and monetary policies, from uncertainties in foreign demand for Mongolian exports, and on Mongolia's ability to access financing. The May 2015 agreement with Rio Tinto to restart the OT mine and the subsequent $4.4 billion finance package signing in December 2015 have served to increase investor confidence but are unlikely to overcome the downward economic pressures in the short term.

Economic Facts#

GDP (purchasing power parity)$36.65 billion (2016 est.)
$36.64 billion (2015 est.)
$35.79 billion (2014 est.)
note: data are in 2016 dollars
GDP (official exchange rate)$11.16 billion (2015 est.)
GDP - real growth rate0% (2016 est.)
2.4% (2015 est.)
7.9% (2014 est.)
GDP - per capita (PPP)$12,200 (2016 est.)
$12,300 (2015 est.)
$12,200 (2014 est.)
note: data are in 2016 dollars
Gross national saving21.2% of GDP (2016 est.)
21.1% of GDP (2015 est.)
23.4% of GDP (2014 est.)
GDP - composition, by end usehousehold consumption: 57.6%
government consumption: 12.1%
investment in fixed capital: 19.9%
investment in inventories: 7.4%
exports of goods and services: 40.1%
imports of goods and services: -37.1% (2016 est.)
GDP - composition, by sector of originagriculture: 14.6%
industry: 35.1%
services: 50.3% (2016 est.)
Agriculture - productswheat, barley, vegetables, forage crops; sheep, goats, cattle, camels, horses
Industriesconstruction and construction materials; mining (coal, copper, molybdenum, fluorspar, tin, tungsten, gold); oil; food and beverages; processing of animal products, cashmere and natural fiber manufacturing
Industrial production growth rate4.9% (2016 est.)
Labor force1.164 million (2015 est.)
Labor force - by occupationagriculture: 28.6%
industry: 21%
services: 50.4% (2014)
Unemployment rate8.3% (2015 est.)
4.8% (2014 est.)
Population below poverty line21.6% (2014 est.)
Household income or consumption by percentage sharelowest 10%: 3%
highest 10%: 28.4% (2008)
Distribution of family income - Gini index36.5 (2008)
32.8 (2002)
Budgetrevenues: $2.868 billion
expenditures: $4.035 billion (2016 est.)
Taxes and other revenues25.7% of GDP (2016 est.)
Budget surplus (+) or deficit (-)-10.5% of GDP (2016 est.)
Public debt72% of GDP (31 September 2015 est.)
Fiscal yearcalendar year
Inflation rate (consumer prices)2.4% (2016 est.)
5.8% (2015 est.)
Central bank discount rate12% (14 January 2016 )
13% (15 January 2015)
Commercial bank prime lending rate19.3% (31 December 2016 est.)
19.56% (31 December 2015 est.)
Stock of narrow money$935 million (31 December 2016 est.)
$844.4 million (31 December 2015 est.)
Stock of broad money$5.822 billion (31 December 2016 est.)
$5.035 billion (31 December 2015 est.)
Stock of domestic credit$7.354 billion (31 December 2016 est.)
$8.048 billion (31 December 2015 est.)
Market value of publicly traded shares$632.6 million (31 December 2015 est.)
$766.1 million (31 December 2014 est.)
$1.095 billion (31 December 2013 est.)
Current account balance-$1.241 billion (2016 est.)
-$567 million (2015 est.)
Exports$4.319 billion (2016 est.)
$4.619 billion (2015 est.)
Exports - commoditiescopper, apparel, livestock, animal products, cashmere, wool, hides, fluorspar, other nonferrous metals, coal, crude oil
Exports - partnersChina 84%, Switzerland 9% (2015)
Imports$3.003 billion (2016 est.)
$3.512 billion (2015 est.)
Imports - commoditiesmachinery and equipment, fuel, cars, food products, industrial consumer goods, chemicals, building materials, cigarettes and tobacco, appliances, soap and detergent
Imports - partnersChina 39.9%, Russia 28.4%, Japan 6.4%, South Korea 6.2% (2015)
Debt - external$18.67 billion (31 December 2016 est.)
$18.16 billion (31 December 2015 est.)
Stock of direct foreign investment - at home$17.62 billion (31 December 2016 est.)
$16.89 billion (31 December 2015 est.)
Stock of direct foreign investment - abroad$379.4 million (31 December 2016 est.)
$367.4 million (31 December 2015 est.)
Exchange ratestogrog/tugriks (MNT) per US dollar -
2,011 (2016 est.)
1,970.3 (2015 est.)
1,970.3 (2014 est.)
1,817.9 (2013 est.)
1,357.6 (2012 est.)