International Trade in Mongolia

News Related to International Trade in Mongolia

Business outline for Mongolia

Economic Overview

The Mongolian economy has kept a steady growth rate since 2002 (9% in 2008), mainly due to the rise in prices of raw materials, stimulated by the Chinese demand. However, the country suffered greatly from the international financial crisis and the decline of global sales of raw materials. After shrinking by 1.6% in 2009, growth recovered in 2010 reaching 8.5% and should further stabilize in 2011. 

In order to deal with the crisis, the government of Mongolia has launched a stimulus plan worth 980 million USD and has also reached an agreement with the IMF. Its main objectives are to control the budgetary deficit and the inflation through an adjusted currency policy and to reinforce the banking system. At the end of hte program, the IMF has emphasized the country's economy's good performance and the success in reaching the objectives it had set itself. The main challenge remains the management of the expected boom of the mining industry.

Even if unemployment is kept at 2.8% of the population, Mongolia remains a poor country, with 33% of its population living beyond the poverty line.

FDI in Figures

Foreign direct investments have been the engine of the Mongolian economic growth. FDI stocks in terms of its percentage of GDP increased from 2000 to 2008. Due to the international financial crisis, these inflows declined in 2009 but they should rebound along with the economic recovery. 

Mongolia has many assets, such as richness in raw materials, a significant livestock and many other sectors with high development potential (mining, food processing, telecommunications, tourism). All the sectors of the Mongolian economy are open to FDI. However, its geographical isolation, corruption and an inefficient transportation system are all obstacles for investment. 

The key sectors which attract most of foreign investment are mining and presently also other sectors, such as oil and construction. The main investing countries are China, Canada, Russia, Great Britain and the USA.

Foreign Trade Overview

Mongolia is one of the most open economies of its region. Foreign policy represented almost 130% of the GDP in 2008. The country's trade policy is implementing reforms conforming to market laws and reducing Mongolia's dependence on the mining sector. 

Customs duties are comparatively low and there are not any trade barriers in the country. Mongolia has the potential of becoming a competitive trade center because of its strategic location in between the large emerging markets of Russia and China. 

Mongolia was for a long time an importing country but during the last few years, it has gradually increased its exports. Consequently, during the next decade its exports might exceed its imports. However, the unfavorable global economic situation has plunged Mongolia's trade deficit in comparison to the level it had in 2007. 

The main trading partners of the country are China, Russia and Canada.