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Economy of Mongolia

Mongolia’s extensive mineral deposits and growth in mining-sector activities have shifted Mongolia’s economy, which traditionally has been dependent on herding and agriculture. Mining, agriculture and service sectors are now the principle sectors in contributing to GDP. Growth has been spurred by the export of commodities such as gold, copper, and cashmere.

The economy is also highly dependent on trade with its neighbor’s. For example, Mongolia purchases 95% of its petroleum products and substantial amount of electric power from Russia, leaving it vulnerable to price increases. Trade with China represents more than half of Mongolia’s total external trade, with nearly 84 percent of Mongolia’s exports going to China.

Over the past decade, Mongolia has made important changes to its economic system, to become an open, dynamic market economy. Recent changes have also been introduced to its mining and investment legislation to generate stability for foreign investors.

Mongolia’s Economy Current Situation

Indicators Unit 2018-8 2019-8 2020-8
Economic Growth* Percentage 6.3 7.3 -9.7
Balance of Payments** Million.USD -235.3 -79.9 -343.7
External trade balance Million.USD 869.2 1,295.8 1,025.6
Foreign exchange reserves** Million.USD 2,952.9 3,618.8 3,620.7
Inflation rate Percentage 7.2 8.1 3.4
MNT to USD Exchange Rate USD/MNT 2,416.8 2,644.7 2,785.8
*First Half-year **7 month
Source: Ministry of Finance Mongolia

Macroeconometric Forecasting

Product Unit 2018 2019 2020 2021 Projections 2022 Projections 2023 Projections
Nominal GDP Billion Tugrik 32,411.20 37,280.84 38,688.00 42,230.10 45,774.70 50,038.00
Real Economic Growth Rate Percentage 7.2 5.2 -1.0 7.2 4.4 6.5
Inflation Rate Percentage 8.1 5.2 3.8 7.0 6.0 6.0
Source: Ministry of Finance Mongolia

Mongolia’s GDP growth /current Billion USD/

Mongolia’s dependence on the mining sector has led to volatility, with recent GDP growth varying between 3 and 17 percent in the last five years. The sector also contributes to 89 percent of exports, one-third of the state budget, 22 percent of GDP, and 70 percent of FDI.

The Government of Mongolia therefore attaches great importance to diversifying its economy away from commodity exports. To this end it seeks to further develop its industrial (especially mining-related), agricultural and tourism sectors, as well as support sectors in banking and finance, and key infrastructure.


Mongolia’s GDP Structure


External Debt

The Government of Mongolia reported that the external debt of the Government reached USD 7,024 million in the third quarter. This is a 12 percent increase comparing to the same period of the previous year. As of the end of 2017, the Government debt outstanding had reached 74.4 percent of GDP. In the first half of 2018, this figure has fallen to 58.9 percent of GDP.

According to the Ministry of Finance, the current ratio of government debt to gross domestic product is expected to reach 55.3 percent in 2019. Interest payment is expected to decrease by MNT 285.1 billion. The government plans to use MNT 1.3 trillion in foreign loans and grants this year. According to the structure of the government debt, most of them are long-term bonds.

In view of the major anticipated payments, the ‘Syndicate’ loan is scheduled to be paid in 2021, the ‘Mazaalai’ bond in 2021, and the ‘Chinggis’ bonds in 2022, totaling about USD 5.4 billion.

In addition, the Central Bank will continue to expand its foreign exchange reserves. As of October, the official foreign exchange reserves have reached its last six-year highs or USD 3.4 billion. The government has reported that it has been working on its debt management.

This year the S&P agency has upgraded Mongolia’s long-term credit rating to “B” and keeps its status “Sustainable”.

Mongolia Credit Rating Dec 2020

Mongol Bank Central Bank of Mongolia
Fitch Ratings 
S&P Global Ratings
Moody’s Ratings



Price stability is a fundamental factor for the country’s sustainable economic growth. The monetary policy of the Mongol Bank Central Bank of Mongolia relies on a regime of inflation targeting, to maintain price stability and to minimize fluctuations in economic growth. At the current stage of economic development in Mongolia, the inflation target for 2019-2021 is set at 6%.

Source: Mongol Bank, National Statistical Office

Foreign Direct Investments

Foreign investment into Mongolia has been increasing significantly up until 2011 when it reached its highest of USD 4.7 billion. According to statistics on foreign direct investment, since Mongolia adopted free market economy in 1990, a total of 14,200 foreign companies from 112 countries have been established and invested over USD 21.4 billion

Source: Mongol Bank, NSO, GASR

Foreign Trade

As of 2018, Mongolia’s foreign trade turnover reached USD12.8 billion, an increase of 22 percent against the previous year. Mongolia’s export volume reached USD7.0 billion, increased by 13 percent as compared with the previous year. Moreover, effective economic policy restores the confidence of investors, causing the foreign direct investment to rise to USD1.3 billion by the end of 2017. It contributed to raising Mongolia’s foreign currency reserve and stabilizing Tugrug currency rate.