Economy of Mongolia

According to cheeroutdoor, agriculture is the backbone of the Mongolian economy. Priority is given to animal husbandry. As of January 1, 2003, the number of livestock was 23.68 million (a decrease of 10-12% compared to the previous year). This reduction is not threatening, since in order to fully meet the demand for meat, the number of livestock should not fall below 15 million heads. Agriculture as an independent branch of the national economy began to develop in 1959 with the development of virgin lands with technical and economic assistance from the USSR.

In 2000–02, agriculture experienced a noticeable decline. Huge damage to the economy was caused as a result of global changes in weather conditions, which led to natural disasters. In 2001-02, the grain harvest decreased due to the drought. The possibility of a way out of this situation is the conduct of irrigated agriculture and the restoration of irrigation systems built with the assistance of the USSR.

Industry: light and food, mining and mining, construction. Budget-forming enterprises are GOK Erdenet, AK Gobi.

In 1996-2000, industrial production decreased by an average of 2.4%, and processing industry – by more than 10%.

The state of the economy began to improve from 2002. Economic growth, despite low prices for Mongolian exports on the world market, reached 3.9% in 2002 against 1.1% in 2001.

The total volume of industrial production increased by 4.7% in 2002 against an increase of 11.9% in 2001, which is due to the low performance of the mining industry. The decline in copper production due to the fall in its prices on the world market had a negative impact on industrial output and export volumes. As a result of the intensive development of the real estate market in Ulaanbaatar, construction increased by 11.0%.

In 2002-03, the macroeconomics stabilized, an economic upsurge was outlined, the situation in the budgetary and financial sphere improved markedly, and tax collections increased. In 2001, GDP growth was 1.5%. In 2002, the GDP increased by 3.8%, the production of the processing industry – by 24%. In 2002, Mongolia produced over $1 billion of GDP, 80% of the gross domestic product comes from the private sector.

Inflation in June 2003 as compared to the same period in 2002 decreased by 2%, amounting to 6.3% from the beginning of the year.

Favorable changes in the investment environment of Mongolia, the discovery of promising gold and copper deposits in the south of the country contributed to an increase in foreign direct investment. Since 1991, the amount of foreign investment has reached 734 million US dollars. Chinese investments account for 90% of the total investment.

The Mongolian government has provided all the bugs of the country with communications, the aimags are connected to the Internet. You can now use a mobile phone in every aimag. Radio relay lines are transferred to a digital system.

A project is being developed for the construction of the Millennium Road, designed for 12 years, a highway through the whole of Mongolia from the Mongolian-Chinese border to the border with the Russian Federation. In 2002, the government passed a law on the creation of a free economic zone Altanbulag (in the west of the country).

There are more than 400 tourism organizations in Mongolia. The oldest of them is the organization for servicing foreign tourists “Zhuulchin” (1954). Such types of tourism as group and individual tourism, hunting and fishing tours, photo safaris, mountain tourism, automobile and horseback routes, interest tours, etc. are successfully developing. 2003 was declared the Year of Visiting Mongolia.

The government adheres to the policy of an annual increase in wages (by 20% in 2002), pensions, and scholarships. The government covered the cost of educating one child from large families of pastoralists. In 2002, 2 billion tugriks were allocated for these purposes.

In 2002, 16 commercial banks were registered in the country. The largest of them is the Trade and Development Bank. In Agricultural (HAAN) and some other banks began to introduce foreign management. To improve financial capacity, the Mongolian government is cooperating with the World Bank and the IMF. As of July 2003, Mongolian banks hold securities worth 45 billion tugriks (approx. US$39.5 million). Compared to 2002, the country’s gold and foreign exchange reserves increased by 38.6% and amounted to 234.8 million US dollars.

The budget deficit in 1996-2000 was 12.5% of GDP. In 2000, the government achieved a reduction in the budget deficit to 6.6%, in 2001 – to 4.5%, in 2002 – to 5.6% of GDP.

From the beginning 1990s Mongolia’s external debt to a number of countries and international organizations amounted to more than 900 million US dollars. In addition, the IMF provided Mongolia with a loan of approx. 70 million. By 2002, 320 million US dollars were paid in interest from the state budget. In 2002, external debt amounted to 88.3% of GDP. The debt of Mongolia to the Russian Federation on state loans provided by the former USSR is 11.3 billion transferable rubles. Every year, the government allocates 20-30 billion tugras to pay off the debt.

According to 2002 data, 13.8% of the country’s population is on the verge of poverty, 20% are considered poor, and 16.3% are very poor. 80% of families involved in animal husbandry are poor. There is a tendency to differentiate the property and living standards of the inhabitants of aimags, cities and individual regions, which is the main reason for migration flows from remote areas to the capital. It is not uncommon for migrants who have moved with their families to cities to join the ranks of the unemployed, as they usually have neither education nor labor qualifications, while in cities there is an oversupply in the labor market. In 2002, 34.5 thousand people were registered at labor exchanges. More than 50% of the unemployed are women. More than 62% of the unemployed population are young people aged 16-34. In 2002, the unemployment rate decreased by 0.6%, but this figure is constantly fluctuating.

The volume of foreign trade turnover in 2001 amounted to 937 million US dollars, incl. export –

383 million, import – 554 million. In 2002, the volume of foreign trade turnover increased by more than 25%. Exports grew by 36%, imports – by 19.5%.

The Russian Federation remains the main foreign trade partner of Mongolia. In 2002, the volume of trade between Mongolia and the Russian Federation amounted to 267.6 million US dollars, i.e. more than 23% of the total foreign trade turnover of Mongolia. Compared to 2001, the volume of trade increased by almost 11%. As of January 2003, there are approx. 170 business units with Russian capital.

Mongolia pays special attention to cooperation with Buryatia, the Altai Republic, Irkutsk, Chita, Kemerovo and Novosibirsk regions. Cross-border trade is $203.2 million.

After the Russian Federation and China, Japan ranks third in the list of Mongolia’s main partners, and in the matter of providing it with donor assistance, it ranks first. In 1992-2002, Japan provided Mongolia with approx. $900 million in grants and concessional loans, Japanese investments exceeded $50 million.

Economy of Mongolia