Economy
From The Report: Mongolia 2013
View in Online Reader

The main event for Mongolia’s economy in 2013 will be the opening of the Oyu Tolgoi copper and gold mine, which many see as a make-or-break moment. Coal, presently the country’s most important commodity, declined in price by some 15% in 2012, with volumes slipping by around 22%. In 2012 the current account deficit reached 16.7%, excluding mining-related imports, according to the IMF, compared to 11.3% in 2011 and 5.7% in 2012, with volumes slipping by around 22%. Exports fell from $4.7bn in 2011 to some $4.4bn in 2012. However, Mongolia seems set to see a commodity boom in 2013, with one high-profile mine starting production, and another planning to ramp up coal extraction. Yet mining is not the only sector with greater economic potential. A number of other areas also seem ripe for development, including tourism, agribusiness and renewable energy.

This chapter includes interviews with Ch. Ulaan, Minister of Finance; P. Batsaikhan, Chairman and President of the Shunkhlai Group; and Jim Dwyer, Executive Director of the Business Council of Mongolia.

Articles from this Chapter

Overview

Still in the game: Despite a challenging 2012, overall prospects continue to look strong
OBG
plus

Just 22 years after embracing the market economy Mongolia has been going through another cycle of economic and political headwinds, although the country’s fundamental macroeconomic indicators appear to be more solid this time round. In 2013 all eyes will be on the Oyu Tolgoi copper and gold mine, set to begin commercial production. This much anticipated “make-or-break” event could transform the country’s economy once and for all, opening up immense opportunities for private sector…

Interview

OBG talks to Ch. Ulaan, Minister of Finance
OBG
plus

Interview: Ch. Ulaan In what way are measures being taken to reduce fiscal spending and curb inflation? CH. ULAAN: One key measure to lower inflation is to reduce fiscal spending and expenditure. Financed by the lump sum of mining revenue, fiscal spending has increased sharply, as have social welfare benefits, leading to rising inflation, motivated by demand. However, fiscal expenditure has yet to be curbed in line with the fall of revenue generated by the sector. National debt has thus risen,…

Analysis

Open for business?: Turmoil over a new law on foreign investment has spooked many
OBG
plus

One of the most controversial topics in Mongolia during 2012 was the introduction in May 2012 of a new foreign investment law. Aimed at giving the government and parliament more control over foreign investment activity in the country, the law also led some foreign investors to suggest the investment climate in Mongolia had soured. In January 2013 news came the law would be revised to assuage concerns. Yet whatever the eventual shape of the regulation, the importance of achieving a balance in…

Analysis

Risks and rewards: Growth seems assured, but diversification remains key
OBG
plus

Although inflation and commodity price fluctuations preoccupy investors and politicians in the short run, Mongolia’s biggest challenge, as long recognised by development experts and local decision makers, will be rising dependence on mining revenues. The debate on how to manage non-renewable mineral wealth is likely to come into sharp focus once the Oyu Tolgoi mine begins operations at the end of 2013, followed by ramp up of the Tavan Tolgoi’s mine coal production. “With two very large…

Interview

OBG talks to P. Batsaikhan, Chairman and President, Shunkhlai Group
OBG
plus

Interview: P. Batsaikhan Mongolia is set to see several years of high double-digit growth. Are local producers able to deal with supply side pressures and stay ahead of demand? P. BATSAIKHAN: At the moment most companies need to import a large part of the raw materials needed for production. However, in some cases, the increasing demand from local consumers may enable local producers and manufacturers to substitute imported goods and start producing locally instead. Transporting and shipping…

Analysis

Our friends in the north: Russia may prove an alternative to overdependence on trade with China
OBG
plus

As a landlocked country, with two giant nations enclosing its northern and southern frontiers, Mongolia has long seen much of its economic activity dominated by relations with Russia and China. In recent times, though, Ulaanbaatar has been trying to widen its overseas channels, instituting a “third neighbour” policy to provide extra balance – and negotiating power – in its deals with Beijing and Moscow. Meanwhile, the rapid expansion of the Chinese economy has exercised its centrifugal…