🌱 Invest in Gobi | Export | ADB's GDP forecast

Mongolia's economy is expected to grow by 5.7% this year, ADB says.

September 25, 2023 • Estimated Reading Time: 8 minutes

Hello from Mongolia’s “Misty Mirage” season: Where autumn brings out its inner splash!

Today’s newsletter covers:

  • 3 reasons to Invest in Gobi

  • Preliminary export performance

  • Mongolia's GDP growth

Let’s dive in!

🌱 Invest in Gobi

Amartuwshin Amaraa

Mark your calendar for the “Invest Gobi 2023” investment forum, taking place in Umnugobi province on the 28th and 29th of this month. Wondering why Gobi is a prime destination? Here’s why.

#1: Ever bigger economy

Mongolia's GDP surged 4.5 times, with Umnugobi's growth even higher at 4.8 times, reaching ₮1.1 trillion in 2010-2021. Interestingly, it now constitutes 2.6% of the nation's GDP. Mining made up 69.5% of Umnugobi's GDP in 2010. But by 2021, it reduced to 29.8%, while the manufacturing sector surged to 44.9%.

  • BIG Budget: Additionally, Umnugobi alone generated an impressive 43.7% of the total budget income of 21 Mongolian provinces as of the first 7 months this year. In this sense, Umnugobi has secured the highest revenue contribution to the state budget, amounting to ₮385.1 billion.

#2: Competitive edge

While each of the 21 provinces has its own distinctive features, Umnugobi holds an astonishing 4th position in the overall provincial competitiveness evaluation with 85.3 points, 20.3 points higher than what most provinces got on average.

  • Why?: The province stands out because it has one of the world's biggest copper-gold mines and has strategic border proximity with China. Across the key categories of economy, governance, infrastructure, and business efficiency, it surpasses the provincial averages significantly.

#3: Buying power

Umnugobi stands strong, securing the 2nd among 21 provinces for a balance of both individual and business accounts. And that balance in both MNT and foreign currency accounts’ equally is influenced by the presence of foreign-invested mining sectors in Umnugobi. Moreover, due to the province's income surpassing its expenses, Umnugobi ranks 3rd out of the 21 provinces with savings of ₮148 billion.

"Invest Gobi 2023" investment forum aims to enlighten both local and international businessmen and investors about Umnugobi province. It's a platform to discuss specific concerns, explore solutions, and share vital information. Access the forum program details HERE.

DATA STORY: Preliminary export performance 

According to the preliminary performance of the first 8 months of 2023, Mongolia made ₮21 trillion of the exports. Of this, ₮20.1 trillion was the sales of the mining and extraction industry. From this, coal accounted for 59.5% of foreign sales of mining products, metal ore for 35.4%, crude oil for 4.1%, and other mineral extraction for 1%.

⬆ Mongolia’s GDP growth in 2023: 5.7%

Mongolia's economy is expected to grow by 5.7% this year, according to the Asian Development Bank. They re-run the forecast and increased the growth by 0.3 percentage points which is good news. However, next year's prediction has been lowered. Why? Here's the scoop.

What's behind 0.3?

There are a few reasons for the improved outlook this year,

  • The country had a surplus of $474.9 million in its balance of payments for the first half of the year, the highest ever.

  • In July, the current account in the balance of payments made a profit of $153.1 million.

  • The mining industry is bouncing back, leading to a 29.2% year-on-year increase in total exports in August, and the foreign trade balance grew by 89.5% to $4.1 billion.

What's Up for Next Year

Unfortunately, next year looks a bit shaky due to some challenges. China's economic troubles and inflation in Mongolia have been on the rise for 27 months, exceeding the target set by the Bank of Mongolia.

  • Now, let's get even clearer: Some big problems like China's money trouble and issues with trading with other countries might slow down Mongolia's growth. This is because there might be less demand for things Mongolia sells, like raw materials, and trading with other countries could be tricky because of tensions between them. There are some serious concerns like reduced demand for raw materials due to China's economic crisis and potential issues with foreign trade because of geopolitical tensions.

To Keep Things Smooth

To cushion the blow from China's economic troubles next year, it's important to tackle some ongoing issues,

  • Diversify the economy beyond mining by broadening the tax base and attracting foreign investment. Support businesses to keep jobs stable.

In simple terms, this year's looking better for Mongolia, but next year could be tougher due to problems in China and rising inflation. To stay strong, Mongolia needs to diversify its economy and help local businesses.

🏃 QUICK STORIES

🔵 Shark D. Enkhtuvshin is elected the president of the Mongolian National Chamber of Commerce and Industry. He won 246 of the 648 valid votes, or the most votes, and became the head of the MNCCI for the next 4 years.

🔵 HiPay is now available in China. They have joined the Alipay+ service as Ant's official partner. With this, HiPay users can connect any bank card to the app and use it to make cashless payments in China.

🔵 Gobi (GOV) to establish its 100% owned subsidiary company "Gobi Cashmere Kazakhstan" in Kazakhstan. The company will have a registered capital of $1,000, and B. Amarsaikhan appointed as the CEO. The share price of Govi increased by 3.6% this year and reached ₮258.

🔵 Mongolia is negotiating an investment agreement with Orano, a French nuclear materials company, to develop the Badrakh Energy uranium mine. The committee's convening focus was on discussing the investment agreement, financial modeling, and proposals. Both sides also, introduced draft documents and comments.

⭐ TOP NEWS

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  • Mining: Getech Supports Asian Battery Minerals in Nickel Exploration in Mongolia. (Getech)

  • Do you know?: About the Mongolia Water Compact (MCA-Mongolia)

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Editor: E.Zolbayar
Writer: M.Khulan & Skh.Angirmaa & G.Aminaa

Disclaimer: The information Inside Mongolia provides is for educational and informational purposes only. It is not intended to be and does not constitute financial advice, trading advice, or any other advice. The decision whether to consider the information we provide is solely our readers' independent decision.