Mongolia: Economic Report 2021

Executive Summary

In 2020, Mongolian economy experienced the worst contraction since the 2009 financial and economic crisis. Fol-lowing the contraction of 4.6% in 2020, the International Monetary Fund forecasted Mongolian economy to grow by 4.5% in 2021, as a result of the stimulus measures adopted by the authorities, improving trade condition and high export demand.

For the first three quarters of 2021, the GDP sees a 3.6% growth rate. For the first 11 months of 2021, the foreign trade turnover reached USD 15 billion which is 27.9% higher than that of the same period of 2020 (+18.8% compared to 2019). Exports reached USD 8.8 billion (+28.8% YoY), of which 82.3% were mineral products. Im-ports amounted to USD 6.2 billion (+26.6% YoY). The trade balance produced a USD 2.6 billion surplus as of November 2021.

China is Mongolia’s strongest trading partner. 86.3% of Mongolian exports were sold to China whereas 37.5% of Mongolia’s imported goods come from there. Russia ranks 2nd as imports source and 5th as exports destination in 2021.

In 2020, imports from Mongolia to Switzerland increased by 40.3% YoY with a value of CHF 873 million (if excl. gold bars and other precious metals: +21.9% YoY, CHF 1.6 million). The largest imports (excl. gold bars and other precious metals) were textiles, clothing, shoes (52.7%) and forestry and agricultural products, fisheries (36.3%).

Exports from Switzerland to Mongolia amounted to CHF 9.9 million in 2020, registering a decrease of 11.4% YoY (if excl. gold bars and other precious metals: CHF 8.8 million, -20.9% YoY). Biggest export groups (excl. gold bars and other precious metals) were precision instruments, clocks and watches and jewellery (44% of total).

Foreign direct investment stocks was over USD 1.65 billion more in 2020 than the previous year. By the end of 2020, the countries with major investments in Mongolia were Canada (38%), China (26%), Singapore (6%) and Luxemburg (6%).

In addition to the China-Mongolia-Russia economic corridor, Mongolia seeks cooperation with “third neighbors” partners such as India and the United States of America, to alleviate its reliance on China and Russia. A ‘Trans-parency Agreement’ between Mongolia and the USA entered into force in 2017 and both sides signed a Strategic Partnership Agreement in August 2019.

Mongolia remains vulnerable to commodity prices fluctuations (mainly coal and copper) and climate shocks. Its political uncertainty (such as problematic governance and corruption) stays as a key concern for business climate. Furthermore, the IMF support program on fiscal consolidation and rehabilitation of the banking system, expired on May 23rd 2020.