Mongolia

In-depth country-focused analysis on Mongolia's economic, political and operational risk environment, complemented by detailed sector insight

Mongolia

Our comprehensive assessment of Mongolia's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Mongolia, as well as the latest industry developments that could impact Mongolia's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Mongolia before your competitors.

Country Risk

Mongolia Country Risk

BMI View:

Gradual Recovery On The Cards

Core Views

  • Parliamentary elections are scheduled to take place by June 2016, and Mongolia's political environment will be volatile ahead of the elections. The two major parties, namely the Democratic Party and the Mongolian People's Party, are unlikely to win a convincing mandate, and we expect a coalition government to be formed. This means that the business environment will remain challenging for investors.

  • The Mongolian economy will begin a gradual recovery in 2016, and we forecast real GDP growth to average 7.9% over the next decade as investment recovers owing to the second phase expansion of the Oyu Tolgoi (OT) copper and gold mine, which is estimated to commence in the middle of 2016. However, the landlocked economy will continue to face headwinds due to a cooling Chinese...

Mongolia Operational Risk Coverage (9)

Mongolia Operational Risk

BMI View:

BMI View: Mongolia has become one of the most rapidly expanding economies in the world in the past decade, now ranked as a mid-low-income country on account of the large amount of foreign direct investment is has received, and is expected to enter the mid-high income strata in the near future. The main driver of Mongolia's rapid economic expansion has been the mining industry's development. Mongolia is richly endowed with natural resources, with commodities such as copper, gold and coal making up the majority of the country's exports. Despite the influx of investment, Mongolia's business environment still poses risk to investors. An...

Mongolia Crime & Security

BMI View:

BMI View: From a crime and security perspective, Mongolia performs respectably in comparison to its Asian peers. Business crimes poses the largest threat to businesses operating in Mongolia, as there are high levels of financial and organised crimes present alongside very low levels of cybersecurity. Petty and violent crime present the next most significant threat, as businesses will need to incur costs to ensure the protection of their employees and physical assets. Overall crime levels are exacerbated by the corruption problem which still hampers the performances of Mongolian law enforcement agencies somewhat. However, Mongolia enjoys strong trade and diplomatic relations with its powerful neighbours (Russia and China), and is not at a high risk from being the target of terrorist attacks. Therefore, Mongolia scores a fairly...

Mongolia Labour Market

BMI View:

Mongolia's labour market risks are driven by the small size of the working age population, which restricts the range of recruitment options available. This issue is exacerbated by low employment rates and the prevalence of agricultural workers, which limit the variety of vocational skills. However, improving enrolment rates in all tiers of education, particularly at the tertiary level, will boost the quality of the labour market, and investors will be able to take advantage of favourable demographics over the medium term. In addition, both obvious and hidden labour costs are low, which significantly reduces the financial burden of employing a large workforce. Mongolia is ranked relatively highly in the Asia region in the BMI Labour Market Risk Index, placed 12th out of 38 states, with a score of 56.3 out of 100.

Investors in Mongolia benefit from a relatively well-educated talent pool, with a comparatively...

Mongolia Logistics

BMI View:

As the 19 th largest in the world, Mongolia is one of the largest landlocked countries in the world. This poses severe constraints to the country's supply chains, which struggle to connect the vastly populated country. An inadequate road, rail and port service means that transporting goods both within and beyond the country's border is a costly venture, while poor water availability, low internet penetration and rising electricity costs pose risk to businesses operating in the country. The country does, however, have an impressive growth rate with the IMF forecasting that Mongolia's economy will be the fastest-growing economy in the world over the next decade. Investors must therefore balance the strong potential of this country with its heavy risks. BMI scores Mongolia 28.5 out of 100 for its logistical risk. This ranks the country last out of 30 countries in Emerging Europe, 2.6 points behind Kyrgyzstan and 33.3 points behind...

Mongolia Trade & Investment

BMI View:

In the past decade, Mongolia has transformed itself from a country under Soviet rule to one of the most rapidly expanding economies in the world. The country was one of the top performing economies in 2013, with growth of 11.7%, and is forecast to be amongst the top-performing countries in 2014. According the World Bank, Mongolia now classifies as a mid-low income country on account of the rapid amount of foreign direct investment is has received, and is expected to enter mid-high income in the near future. The main driver of Mongolia's rapid economic expansion has been the mining industry's development. Mongolia is richly endowed with natural resources, with commodities such as copper, gold and coal making up the majority of the country's exports. Despite the influx of investment, Mongolia's business environment still poses risk to investors. An inadequate legal framework, high levels of red tape and high levels of trade protection increase operational risk in the...

Mongolia Industry Coverage (2)

Infrastructure

Mongolia Infrastructure

BMI View:

BMI View: Mongolia's construction industry went significantly off trend in 2014 and 2015 due to the slowdown in Russia and weakening demand in China. However, there are strong fundamentals underpinning Mongolia's construction outlook over the next decade, namely GDP growth, the underdeveloped state of much of the infrastructure, expanding commodities sector and strengthening regional cooperation and investment. Industry growth to 2024 will average 5.4% annually.

Latest Updates And Structural Trends

  • On the back of a strengthening project pipeline we forecast sector growth adjusting to 6.5% in 2016 and averaging 5.4% annually to 2024.

  • Foreign inflows are returning to Mongolia. USD65.7mn worth of FDI flowed...

Mining

Mongolia Mining

BMI View:

BMI View: Mongolia's mining sector growth will be accelerate on the back of foreign mining investment, a robust infrastructure framework and the country's strategic close proximity to major export markets such as China. Projects such as Rio Tinto's Oyu Tolgoi mine will significantly increase the country's mining output over the coming years.

Mongolia Mining Industry Value
2014e 2015f ...

Latest Mongolia Articles

  • We have revised down our CME milk price forecast for 2016 and now see price...

  • We believe that there is currently disconnect between oil prices and fundam...

  • Price-elastic consumption growth and more limited growth in supply will mai...

Latest Mongolia Blogs

  • Business Monitor International (BMI) has just published two articles on the...

  • A renewed slowdown in Chinese economic growth in the second half of 2013 wi...

×

Download PDF

By submitting this form you are acknowledging that you have read and understood our Privacy Policy.

Thank you for your interest

You will shortly receive your free executive summary by email.