Global Trends Hit Mongolian Economy

The country’s lifeline is its mining industry, but Chinese and other foreign interest is waning.
2 October 2015
Mongolia’s government, desperate to refill shrinking state coffers, is considering selling off state assets, tax increases and other measures, Bloomberg Business reports.

Bolor Bayarbaatar
The budget deficit may reach 1 trillion tugrik ($500 million) this year, almost double the level of 600 billion tugrik in the first eight months of 2015, Finance Minister Bolor Bayarbaatar said.

Mongolia’s economy relies heavily on mineral extraction, so the recent drop in commodity prices, added to the economic slowdown in China and falling interest by foreign investors in dealing with see-sawing government policy has hit it hard.

  • Mongolian bonds are also in the dumps. The yield on a 10-year government bond rose to above 9 percent in September, “making it the worst performer in Asia amid a broad selloff of emerging-market debt,” The Wall Street Journal says.

  • The Asian Development Bank (ADB) will loan Mongolia $150 million to support its social welfare programs and other short-term revenue shortfalls.

  • A deal to develop the huge Tavan Tolgoi coal mine is dormant, with China’s slower growth at least partly to blame, Reuters reports.

  • After several years of economic boom, including a 17.5 percent economic growth rate in 2011, Mongolia's economy went into a nosedive as commodity prices faltered. Foreign direct investment plummeted by more than 70 percent from 2013 to 2014.

  • Another factor keeping investors away are the pitfalls of Mongolia's mining industry including official delays and environmental concerns. The authorities attempted to break the stalemate through a national text-message referendum.


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