Mongolia
Professor Shagdar Enkhbayar
Purpose
To contribute to the understanding and evaluation of the Mongolian economy:
- We analyze Mongolia’s economic development strategy.
- We evaluate Mongolia’s industrial structure and development path.
- We evaluate Mongolia’s economic relations with Northeast Asian countries.
Overview
After pursuing a centrally planned command economy for nearly 70 years, Mongolia transitioned to a market economy in 1990. Neo-liberal shock therapy policies during the transition period exacted a heavy toll on Mongolia’s economy; the gross national product shrank by nearly a quarter between 1990 and 1993. Although recovery was slow until the early 2000s, the economy has continued to grow at an average of 7.6 percent since 2003, supported by the mining industry, excluding the Lehman shock in 2009 and the COVID-19 pandemic in 2020. The start of production at the Oyu Tolgoi copper mine, which is expected to become the fourth largest in the world by 2030, is an important milestone that will boost the economy, especially exports. In 2020, the Vision 2050 long-term development strategy was adopted. In 2021, the New Reconstruction Policy was approved by the Diet to address six bottlenecks that are hindering economic development. Although Mongolia’s economy has made a V-shaped recovery from the recent COVID-19 pandemic shock, it remains vulnerable to external shocks due to its overreliance on mining and exports to China. As Mongolia’s economic development continues to depend on the mining industry, economic diversification remains a challenge for development policy. Regional development is one of the important issues for this country with a small population. Mongolia approved a regional development plan in 2001, and policy revisions are currently underway. Government and private sector debt will be a major challenge in the coming years. Foreign investors are closely monitoring the general election to be held in mid-2024 and the policy developments that will accompany it. We need to pay attention to the interaction between Mongolia’s economy and the Northeast Asian economy as well as the country’s policy scenarios.