Mongolia Country Risk Report

Published 26 August 2015 | Quarterly

  • 36 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
Mongolia Country Risk Report

Core Views

  • The Mongolian government will continue to keep on good terms with its neighbours. Mongolia remains at risk of becoming dependent on China, and therefore it will continue to pursue investment ties with other countries in the US, India, as well as states in the North Asian region such as Japan in its so called 'third neighbour' foreign policy.

  • Weak mining-related investment, subdued export demand due to a cooling Chinese economy, and a slowdown in the construction and real estate sectors will act as headwinds to the Mongolian economy in 2015. Beyond 2015, we expect real GDP growth to pick up over the coming years, averaging 8.1% over the next decade, as the second phase expansion of the Oyu Tolgoi (OT) copper and gold mine looks set to being in late 2015.

  • We are bearish on the Mongolian togrog against the US dollar owing to the country's weak economic fundamentals and technical picture. Notably, elevated inflation and a deteriorating terms of trade picture point towards further weakness in the Mongolian togrog. However, the weakness will not be excessive as foreign capital return to the country owing to the second phase expansion of the OT copper and gold mine, which looks set to begin in late 2015. We forecast the unit to average MNT1,975/USD in 2015 and MNT2,000/USD in 2016.

  • Headline inflation will decline over the coming months on the back of the Bank of Mongolia (BoM)'s tight monetary policy, and we expect headline consumer price inflation (CPI) to average 7.0% in 2015 (versus 12.9% in 2014). Meanwhile, we expect the BoM to keep its key policy rate on hold at 13.00% for the time being, before cutting by 100 basis points (bps) to 12.00% in Q415, in an attempt to support the flagging economy.

  • The Mongolian government continues to make considerable expenditure through the Development Bank of Mongolia (DBM), which is operating off-budget. We remain concerned about the country's overall fiscal deficit over the coming years as it will remain...

Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Sino-Mongolian Relations To Strengthen Further
Long-Term Political Outlook
Transforming Minerals Into Wealth
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Activity
Growth To Trend Lower Amid Multiple Headwinds
table : Economic Activit y
Fiscal Policy
table : Fiscal Policy
Monetary Policy
BoM To Stand Pat Amid Elevated Inflation
table : Monetary Policy
Exchange Rate Forecast
MNT: Stabilisation Likely, But More Downside Thereafter
table : Current Account
Chapter 3: 10-Year Forecast
The Mongolian Economy To 2024
Fierce But Volatile Growth In Store
table : Long -Term Macroeconomic Forecasts
Chapter 4: Operational Risk
SWOT Analysis
Operational Risk Index
Chapter 5: BMI Global Macro Outlook
Global Outlook
EMs Still Slowing
Table : Global Assumptions
Table : Developed States , Real GDP Growt H, %
Table : Emerging Markets , Real GDP Growth , %

The Mongolia Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Mongolia. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Mongolia's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI Research.

Key Uses

  • Forecast the pace and stability of Mongolia's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Mongolia's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Mongolia, including currency volatility, the commodity price boom and protectionist policies.

The Mongolia Country Risk Report by BMI Research includes three major sections: Economic Outlook, Political Outlook and Operational Risk.

Economic Outlook:

How will the Mongolia' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Mongolia through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Mongolia Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:


  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Mongolia and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Mongolia, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Mongolia over the next 5-years?

BMI's Mongolia country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Mongolia Market - Political Strengths, Weaknesses, Opportunities and Threats facing Mongolia.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Mongolia's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Mongolia’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Mongolia's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Mongolia?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Mongolia against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

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