While billion dollar investments into Mongolia steal the spotlight, the country has also been actively pursuing grassroots economic development through microfinance initiatives. As far back as 2005, the country declared a "National Year of Microfinance", which coincided with the United Nation's "Microcredit Year". The country’s transition from a centrally-planned economy to a democratic, free market economic model has brought prosperity, albeit unevenly distributed. Mongolia's commitment to microfinance initiatives demonstrates a recognition of this issue and their recent success bodes well for inclusive economic development.
Well-educated citizens today are the key foundation for any country’s well-being and whole development. Mongolia has a relatively higher literacy rate around 97% than other developing countries in the region.
Landlocked in Central Asia, Mongolia sits at a geopolitical crossroads. With Russia to north and China to the south, it must find a way to take advantage of its resource wealth and strategic location without sacrificing economic independence to its bigger neighbours.
Standard & Poor’s upgraded their rating for Mongolian sovereign debt from ‘B-’ to ‘B’ with a stable outlook. The news echoes wider confidence that IMF-led reforms and stronger commodity prices have put government finances back on an even keel. S&P is the third ratings agency this year to upgrade their Mongolia outlook, behind Moody’s and Fitch.
The Asian Development Bank (ADB) has revised their projected growth statistics for Mongolia in 2018 and 2019. The forecast for this year was raised to 6.4%, significantly higher than the previous estimate of 3.8%. This momentum is expected to continue into 2019, with the ADB upping their forecast from 4.3% to 6.1%. The announcement underscores growing investor confidence in the country, and echoes a wider consensus that an economic rebound is firmly underway.
Mongolia's GDP has swung from 2011's 17% growth to a mere 1.6% in 2016, back up to a 5% or more growth that exceeds that of saturated economies in the developed world. We'll walk through the country's GDP situation, and touch briefly on the commodity export market in the US.
Mongolia’s financial sector grew from a centrally planned, Soviet-style single bank system to its present composition of fourteen commercial banks, seventeen licensed insurance related companies, 62 stock & brokerage related institutions, 518 Non-Banking Financial institutions (NBFIs), and about 280 Savings and Credit Co-operatives (SCCs). All banks are under supervision by Bank of Mongolia (“BoM”) the country’s central bank, while all NBFIs, SCCs and brokerage and insurance companies report to FRC.
Mongolia faces a daunting task in improving its physical infrastructure, but has an administration with the ability to do it. On the back of stronger economic performance in the last year and pragmatic policy making, Fitch anticipated that the country’s construction industry will grow from MNT1017bn this year to 1589bn MNT in 2020.
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