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July 14, 2023

An Untapped Economic Power

As the 18th largest country in the world, Mongolia is a largely untapped, emerging economic power, outpacing China in terms of both economic growth and job market opportunities. With 3.3 million people and an economy projected to accelerate to 6.0% by 2025 and maintain a steady growth of between 5.5-6.0% through 2027, Mongolia’s investment potential is significant.

Fundamentally, the country’s prospects lie in its natural resource wealth. With an estimated 6,000 individual mineral deposits, mining makes up 25% of Mongolia’s GDP and 80% of its exports. Currently, more than 80% of all exports go to China, though the government, controlled by the Mongolian People’s Party (MPP), has in recent years taken measures to diversify its export base. Japan, South Korea, and the European Union have all emerged as eager investors in the country’s mining industry.

The MPP has also prioritized sustainable and green mining practices, as well as the exploration of renewable energy sources.

The MPP’s State Policy on Energy (2015-2030) targets 30% in installed renewable energy capacity by 2030. With wind and solar potential that together amount to 2,600 gigawatts of installed capacity – or 5,457 terawatt-hours of clean electricity generation per year – Mongolia is de facto able to meet its own national energy demand. With the appropriate transmission infrastructure, too, it could meet regional demand in northeast Asia.

Continued expansion of Mongolia’s extractive and renewable sectors will spill over into other industries, notably banking. As of end-2022, Mongolia’s banking sector indicators point to comparatively sustainable growth. Total assets reached MNT 3.4 trillion (approximately US$9.8 billion), an increase of 9% over the previous year. Commercial banks had NPL rates averaging 9.1%, compared to 10.7% at end-2021. In addition, outstanding commercial bank deposits have been increasing since 2015 (Figure 1) – a reflection of Mongolia’s sustained economic growth and improved banking sector stability.

(Figure 1) – a reflection of Mongolia’s sustained economic growth and improved banking sector stability.

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