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Submitted by: Munhtulga Sodnompil()

Submitted to: Dr.Shi()

International Business
Year 1
I-Shou university
International business department

Contents ...........................................................................................................2
1 Introduction ...................................................................................................3
2 Main body ................................................................................................... .4
2.1 UN statement.7
2.2 Mongolian ministry of finances statement9
6 Conclusions .................................................................................................11
References .....................................................................................................12

When everyone sees Mongolia, they will probably think about Genghis-Kahn. Not so
much of them know about present Mongolian social life. 20 years ago our economy
suffered triple-digit inflation, rising unemployment, shortages of basic goods, and
food rationing. After we moved into Democratic country, economic growth began
again. This report will analyze the present Mongolian economy . And consider recent
growth in our economy.
The report is divided into four main sections.
It will first consider economic activity in Mongolia and some introductions.
It will then go on to describe economic growth of Mongolia.
The third part compares current Mongolian economic situation.
Finally, some conclusions will be drawn as to Mongolian governments economic

Main body
Economic activity in Mongolia has traditionally been based on agriculture and the
breeding of livestock..
Mongolia's extensive mineral deposits, however, have attracted foreign investors,
and the country is undergoing an economic transformation through its mining

boom. Mongolia holds copper, gold, coal, molybdenum, fluorspar, uranium, tin, and
tungsten deposits, among others, which account for a large part of foreign direct
investment and government revenues. Soviet assistance, at its height one-third of
GDP, disappeared almost overnight in 1990 and 1991 at the time of the
dismantlement of the USSR. The following decade saw Mongolia endure both
deep recession, because of political inaction and natural disasters, as well as
economic growth, because of reform-embracing, free-market economics and
extensive privatization of the formerly state-run economy. The country opened a
fledgling stock exchange in 1991. Mongolia joined the World Trade Organization in
1997 and seeks to expand its participation in regional economic and trade regimes.
Growth averaged nearly 9% per year in 2004-08 largely because of high copper
prices and new gold production. By late 2008, the country was faced with external
shocks from the global financial crisis, and a sharp drop in commodity prices
slashed government revenues. GDP dropped 1.3% in 2009. In early 2009, the
International Monetary Fund reached a $236 million Stand-by Arrangement with
Mongolia and the country has largely emerged from the crisis. The banking sector
is recovering and the government has started to enact greater supervision
regulations. In October 2009, Mongolia passed long-awaited legislation on an
investment agreement to develop the Oyu Tolgoi mine, considered to be among
the world's largest untapped copper deposits. Another similarly lengthy process is
underway for an investment agreement for the massive coal mine at Tavan Tolgoi;
it is under review by the National Security. The economy grew 6.4% in 2010 and
17.3% in 2011, largely on the strength of commodity exports to nearby countries.
Trade with China represents more than half of Mongolia's total external trade China receives more than 90% of Mongolia's exports. Mongolia purchases 95% of
its petroleum products and a substantial amount of electric power from Russia,
leaving it vulnerable to price increases. In the face of anticipated growth in mining
revenues, the country is grappling with the challenge of avoiding an overheated
economy. Due to severe winter weather in 2009-10, Mongolia lost 22% of its total
livestock, and meat prices doubled. Renewed concerns are surfacing over
controlling inflation, which was more than 10% for much of 2010-11, due in part to
soaring food prices. Government spending - on line to increase as much as 75%
over 2011 - has added to concerns over inflation. Remittances from Mongolians
working abroad, particularly in South Korea, are significant. Money-laundering is a
growing concern.



GDP-real growth rate
Unemployment rate





From this chart we can see our GDP is rising and unemployment is decreasing each year.
Also our GDP-per capita rose from 4100$ to 4800$. On the other hand our economy debt
is still 2 billion dollars.



$4.818 billion (2011 copper, apparel,
livestock, animal
country comparison to products, cashmere,
the world: 119
wool, hides, fluorspar,
$2.909 billion (2010 other nonferrous
metals, coal, crude oil
$5.81 billion (2011
machinery and
equipment, fuel, cars,
country comparison to food products,
the world: 121
industrial consumer
$3.089 billion (2010 goods, chemicals,
building materials,
cigarettes and
tobacco, appliances,
soap and detergent

China 92.1%, Russia
2%, Canada 1.9%
(2011 est.)

China 30.7%, Russia

24.5%, US 8.1%,
Japan 7.4%, South
Korea 5.5% (2011

This economic growth has translated into some benefits for the people of Mongolia.
Poverty has been on a downward trend over the past decade. Most recently, it
decreased from 39.2 percent in 2010 to 29.8 percent in 2011. Substantial progress
has also been made in regard to several Millennium Development Goals (MDGs) at
the national level, though significant regional disparities prevail.

The Wolf Economy

The term was notably coined by Renaissance Capital in their report - Mongolias
"Blue Sky Opportunity. They state that Mongolia is set to become the new Asian
Tiger, or "Mongolian Wolf" as we prefer, and are "unstoppable". With the recent
developments in the mining industry and foreign interest increasing at an astonishing
rate, it is claimed their Wolf Economy looks ready to pounce. The terms aggressive
title mirrors the countrys attitude in the capital market environment, and with
newfound mineral prospects it has the chance to retain its title as the fastest growing
economy in the region.

The banking sector is highly concentrated, with four banks holding a significant
majority market share:

XacBank - XacBank is a community development bank and microfinance

institution headquartered in Ulaanbaatar, with a nation-wide network of 100
offices and 1309 staff as of June 2012.

Khan Bank - Khan Bank has 21 regional branch offices throughout the
country, each of which supervises an additional 15 to 25 smaller branches in
its area.

Golomt Bank - Golomt Bank started in 1995 and now manages around 23% of
the assets in the domestic banking system.

Trade and Development Bank - TDB was formed in 1990 and is thus the
oldest bank in Mongolia. It has a network of 28 branches and settlement
centers, 60 ATMs, 1300 POS terminals, and Internet/SMS banking throughout
the country

UN independent expert warns economic

growth in Mongolia is not benefiting the poor
7 December 2012 While the Mongolian economy has experienced continued
growth, this has not benefited the countrys poor, a United Nations independent
expert warned, urging the Government to adopt poverty reduction strategies based
on human rights approaches.
While some parts of the country are being transformed, poverty remains very high
and is becoming entrenched not only in rural areas but also in urban centres as the
income gap widens and inequality increasessaid the Special Rapporteur on extreme
poverty and human rights, Magdalena Seplveda, following a visit to the Central
Asian country.
She added, The fact that poverty levels remain high and there are increasing
inequalities is a clear demonstration that the benefits of economic growth have not
trickled down to the poor.
Ms. Seplveda expressed concern about the challenges faced by vulnerable groups
affected by poverty and social exclusion in Mongolia, such as women, children,
persons with disabilities, older persons, migrants, herders and nomadic
communities; ethnic minorities; lesbian, gay, bisexual and transgender people;
persons living with HIV/AIDS, and stateless persons.
During her fiveGovernment

day visit, Ms. Seplveda met with senior

officials, donor agencies, international
organizations, financial institutions, civil society
communities living in poverty both within the
Ulaanbaatar, and surrounding districts, as well
Erden soum in the Tuv province.
The Special Rapporteur urged
the Government to
immediately address
the critical
needs of the
poorest and most

ensuring that their rights are protected and they are provided with adequate
resources and access to basic services.
I have found that, for the most part, Mongolia has established a robust legal
framework, recognizing that everyone must enjoy the rights to education, health,
housing, food, etc. however, the laws do not necessarily translate into the everyday
reality for many Mongolians, she said, stressing that there are severe
implementation gaps in almost all social policies, ranging from domestic violence to
Accountability mechanisms to monitor the implementation and progress of poverty
reduction strategies will be necessary, Ms. Seplveda noted.
Mongolia must foresee the necessary budgetary implications and ensure
sustainability in the long term and implement the strategy with strong cross-sectorial
coordination through the leadership of a designated ministry, she said. Those living
in poverty in Mongolia can wait no longer.

Next 4 years Mongolian economic policy by

Mongolian ministry of finance
In the future, account of the development of mining, increasing of employment and
foreign investment, stock development etc we estimated that our economic growth
will not be less than 15%.Also Oyu-Tolgois gold and copper mining is a big
promotion for our economy which is start mining from 2013.

Assumed growth of GDP(Billion Tugrug)

Assumed growth of
GDP(Billion Tugrug)






In 2012 inflation rate is 15% and because of economic growth we have been
expecting our inflation rate will be 13.1 in coming years. If government keep holding
inflation and not support demand, inflation rate could be under 10%. Furthermore,
foreign investment in mining is increasing and our exportation(gold, copper) price is
rising on the world market our exchange rate could increase in next 4 years.
Assume of government debt
This year government enacted the project which is called Administration of
government debt. In this project we set two goals:
1. To decrease internal debt by step by step. To fund 50% of government
needs from internal debt.
2. To decrease external debt by 80%. In 2014 year decrease foreign
liabilities by 50%.

Assumed Government bonds


Government bonds




Assumed government debt


Assumed government





It has been shown, therefore, that we can clearly see there is economic
growth in Mongolia. But still behind a lot of countries. The most important thing is
Mongolian people cant get the profit from this economic growth. Poverty and
unemployment rate is still high. Our government not only just focus on economic but
also should improve social life. I am sure that our economy will become strongest in
Asia in the near future. In my opinion, only young generations can develop both
economy and social life. And mining is not the only way to develop, education is the
most important thing. A very good example is that after the defeat of world war II
Germany suffered from recession. But they invested all of their budget in education
and today we can see that was right decision and economic growth is related to
education. Thus we cant just think about how to develop our economy, we also have
to improve education system especially high school education system. We bordered
with Russia and China, both have a strongest economy of the world. So if we use
this advantages our economy will be more and more stronger.