1. Market Research
  2. > Materials
  3. > Metals Market Trends
  4. > Mongolia Country Risk Report Q1 2017

Mongolia Country Risk Report Q1 2017

  • November 2016
  • -
  • Business Monitor International
  • -
  • 31 pages

Core Views

The landslide victory by the Mongolian People's Party (MPP) in the June 29 parliamentary elections will usher in a period of relative political stability and improved policy co-ordination over the coming years. Mongolia's real GDP expanded at a muted rate of 1.4% y-o-y in H116, and we are downgrading our 2016 real GDP growth forecast to 1.2% (from 3.0% previously) to reflect this deterioration. However, the Mongolian economy should recover gradually from 2017 mainly due to the second phase development of the Oyu Tolgoi copper and gold mine, despite our slight revision of the 2017 growth forecast to 3.7% (versus 4.2% previously).

The Mongolian togrog has weakened significantly to record-low levels against the US dollar, and we are revising our 2016 average forecast to MNT2,150/USD (versus MNT2,040 previously) as investors are likely to maintain their cautious stance towards the currency. Nevertheless, we forecast the MNT to stabilise in 2017 and average MNT2,300/USD. Capital flows will likely return gradually amid confidence instilled by a possible IMF bailout, efforts by policymakers to consolidate its fiscal accounts, and a modest recovery mainly driven by the second phase expansion of the Oyu Tolgoi copper and gold mine. Mongolia's weak public finances have worsened significantly over the course of 2016, and are likely to improve only marginally over the coming years. The MPP-led government aims to contain spending while increasing revenues by raising personal income taxes. We forecast the reported fiscal deficit as a share of GDP to widen significantly to 19.0% in 2016 (from 5.0% in 2015), before narrowing slightly to 18.6% in 2017.

Major Forecast Changes We have downgraded our 2016 real GDP growth forecast to 1.2% (from 3.0% previously) as the Mongolian economy deteriorated in Q216. That said, we believe that the recovery has only been delayed, and the implementation of the second phase expansion of the Oyu Tolgoi (OT) copper and gold mine should lead to a pick-up in growth over the coming years. The Mongolian togrog has depreciated by around 16% against the US dollar since the start of 2016, and we have revised our average 2016 forecast lower to MNT2,150/USD (from MNT2,040/USD previously) as we expect the currency to remain under downside pressure over the coming months. We have revised our forecast for the reported fiscal deficit as a share of GDP to 19.0% in 2016 and 18.6% in 2017 (versus 8.0% and 7.8% previously) to reflect the sharp deterioration in Mongolia's fiscal deficit over the course of 2016.

Table Of Contents

Mongolia Country Risk Report Q1 2017
Executive Summary 5
Core Views 5
Major Forecast Changes 5
Key Risks5
Chapter 1: Economic Outlook7
SWOT Analysis 7
BMI Economic Risk Index 7
Economic Growth Outlook 8
Growth Recovery Delayed Until 20178
Mongolia's real GDP expanded at a muted rate of 1 4% y-o-y in H116, and we are downgrading our 2016 real GDP growth forecast to
1 2 % (from 3 0% previously) to reflect this deterioration However, the Mongolian economy should recover gradually from 2017 mainly
due to the second phase development of the Oyu Tolgoi copper and gold mine, despite our slight revision of the 2017 growth forecast to
3 7 % (versus 4 2% previously)
GDP By Expenditure Outlook 9
TABLE: GDP GROWTH FORECASTS 9
TABLE: PRIVATE CONSUMPTION FORECASTS 9
TABLE: GOVERNMENT CONSUMPTION FORECASTS 9
TABLE: FIXED INVESTMENT FORECASTS 10
TABLE : NET EXPORTS FORECASTS 10
Structural Fiscal Position 10
TABLE: FISCAL and PUBLIC DEBT FORECASTS 11
TABLE: MAIN REVENUE and EXPENDITURE CATEGORIES (2015) 11
Currency Forecast 11
MNT To Gradually Find Support In 2017 11
The Mongolian togrog has weaken significantly to record-low levels against the US dollar (MNT2,3 27/USD), and we are revising our
2016 average forecast to MNT2,150/USD (versus MNT2,040 previously) as investors are likely to maintain their cautious stance towards
the currency Nevertheless, we forecast the MNT to stabilise in 2017 and average MNT2,300/USD Capital flows will likely return
gradually amid confidence instilled by a possible IMF bailout, efforts by policymakers to consolidate its fiscal accounts, and a modest
recovery mainly driven by the second phase expansion of the Oyu Tolgoi copper and gold mine
TABLE: BMI CURRENCY FORECAST 12
Structural External Position 13
TABLE: MAIN EXPORT and IMPORT PARTNERS (2015) 13
TABLE: MAIN EXPORTS and IMPORTS (2015) 13
TABLE: CAPITAL and FINANCIAL ACCOUNT BALANCE 13
Monetary Policy Framework 14
TABLE : MONETARY POLICY FORECASTS 15
Chapter 2: 10-Year Forecast 17
The Mongolian Economy To 2025 17
Fierce But Volatile Growth In Store 17
At face value, Mongolia's long-term economic prospects appear nothing short of formidable, such is the size of untapped natural
resource wealth in the country, and we expect the country to remain one of the fastest-growing economies globally through to 2025
(at an annual average clip of 7 3%) That said, we do not expect the coming decade to be smooth sailing Structural factors such as
the magnitude of investment spending, the potential for an unprecedented scale of money creation and a gradual erosion of the local
business environment, coupled with question marks over the sustainability of long-term Chinese commodity demand all point to a more
volatile growth trajectory for Mongolia in the years ahead
TABLE: LONG-TERM MACROECONOMIC FORECASTS 17
Contents
Chapter 3: Political Outlook 21
SWOT Analysis 21
BMI Political Risk Index21
Domestic Politics22
Relations With Japan To Warm Further 22
Mongolian Prime Minister Jargaltulga Erdenebat's decision to make Japan his first official overseas trip since taking office in July
highlights that Mongolian policymakers recognise the risks of being overly reliant on China and Russia We therefore believe that Ulaan
Bataar will continue to seek to strengthen the relations between the two countries as part of its 'Third Neighbour' policy
TABLE: POLITICAL OVERVIEW 22
Long-Term Political Outlook 23
Transforming Minerals Into Wealth 23
The Mongolian government will face major domestic challenges over the coming decade as the country's mining boom takes off, and it
seeks to strike a balance between distributing the revenues in a way that is acceptable to the population, while avoiding stoking inflation
Moreover, we believe it will face a tough task in managing the social change that the mining boom will create, including immigration and
the growing gap between the rich and poor In foreign policy, the government's chief priority will remain avoiding falling too much under
the influence of neighbours Russia and China, though we believe the latter in particular will prove almost impossible
Chapter 4: BMI Global Macro Outlook27
Global Macro Outlook 27
Austerity Has Peaked, But Populism Is Not Yet Policy 27
TABLE: GLOBAL ASSUMPTIONS 27
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % 28
TABLE: EMERGING MARKETS, REAL GDP GROWTH, % 29
TABLE: MACROECONOMIC DATA and FORECASTS 31

View This Report »

Get Industry Insights. Simply.

  • Latest reports & slideshows with insights from top research analysts
  • 24 Million searchable statistics with tables, figures & datasets
  • More than 10,000 trusted sources
24/7 Customer Support

Talk to Ahmad

+1 718 618 4302

Purchase Reports From Reputable Market Research Publishers
Nickel Profile, Bar and Rod Markets in the World to 2020 - Market Size, Development, and Forecasts

Nickel Profile, Bar and Rod Markets in the World to 2020 - Market Size, Development, and Forecasts

  • $ 20469
  • Industry report
  • September 2016
  • by Global Research & Data Services

The expansion of the global nickel profile, bar and rod industry is forecast to reach 2.6% p.a. in the coming years. Between 2009 and 2015 the market increased with an average annual growth of 2.7%. Currently, ...

Copper Markets in the World to 2020 - Market Size, Development, and Forecasts

Copper Markets in the World to 2020 - Market Size, Development, and Forecasts

  • $ 20469
  • Industry report
  • September 2016
  • by Global Research & Data Services

The expansion of the global copper industry is forecast to reach 4.2% p.a. in the coming years. Between 2009 and 2015 the market increased with an average annual growth of 5.0%. Currently, copper sheets ...

Copper Sheet and Plate Markets in the World to 2020 - Market Size, Development, and Forecasts

Copper Sheet and Plate Markets in the World to 2020 - Market Size, Development, and Forecasts

  • $ 20469
  • Industry report
  • September 2016
  • by Global Research & Data Services

The report package Copper Sheet and Plate Markets in the World to 2020 - Market Size, Development, and Forecasts offers the most up-to-date industry data on the actual market situation, and future outlook ...


Download Unlimited Documents from Trusted Public Sources

Petroleum Industry in Iran and the US - Forecast

  • November 2016
    10 pages
  • Petroleum  

    Oil Refining  

    Metals  

  • Iran  

    United States  

View report >

Silver Industry in Georgia

  • November 2016
    6 pages
  • Silver  

    Barite  

  • Georgia  

View report >

The future of the Metals Industry

  • November 2016
  • Metals  

    Mineral  

  • World  

    Namibia  

View report >

Metals Statistics

11 days ago

ref:plp2016

Reportlinker.com © Copyright 2016. All rights reserved.

ReportLinker simplifies how Analysts and Decision Makers get industry data for their business.