The momentum should swing in MPP’s favor as the political establishment undergoes scrutiny over the economy’s poor status. The MPP governed during Mongolia’s commodities boom in previous years, with growth reaching 17.5% in 2011 alone. Regardless of the election outcome, new and established leaders will struggle to foster growth because the economy is so heavily dependent on the commodities sector.
Furthermore, China’s lacking growth takes a heavy toll on Mongolia’s economy, as the Chinese buy over 90% of Mongolian resources that include copper and coal, and Beijing is curbing coal production to reduce pollution in major cities. Russia is another viable business partner for Mongolia, but the Russian economy is faring through a low-priced energy market and Western sanctions. Moreover, many foreign investors have lost interest due to a non-conducive business climate and the government’s fallout with mining companies.
Authorities reached an agreement with investors, but Saikhanbileg has paid a political price, as many feel incumbent officials are caving into big industry at the expense of poor Mongolians, and protests have erupted against the prime minister’s administration in the past few months.
Despite the East Asian’s country’s success in resource extraction, many people have remained impoverished, benefiting little from the economic boom that took place years ago. Many herders from the countryside moved to the city in search of new opportunities, but high-quality jobs remain scarce in a tougher economy, and more people have slipped into poverty as a result.
Mongolia failed to follow the Chinese model, where a bustling manufacturing sector became a primary factor propelling robust growth in the Middle Kingdom. Mongolia’s manufacturing sector is ill-equipped to become a major sector, and the same can be said of tourism. Tourism shows vast potential, but the sector is in the middle of a slowdown, as Russian and Chinese tourists visit the country less frequently, notes UPI.
Aside from tourism and commodities, Mongolia has little else to fall back on, and leaders on all sides of the political aisle have failed to upgrade the economy while searching for alternative avenues that could have fueled prosperity for decades to come. Economic innovation, however, requires some level of cooperation between parties, but leadership remains steeped in political battles, holding back Mongolian progress.
Source:http://www.economywatch.com/
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