Economy

From Mongol Studies Online Reference

Mongolia’s 2007 GDP (purchasing power parity) was USD 8.42 billion, growing 9.9% that year. The per capita DGP was USD 3,200 ^[1]. The World Bank classifies Mongolia as a “lower-middle-income economy” ^[2]. In 2006, industry, agriculture, and services were 40.4%, 18.8%, and 40.8% of Mongolia’s GDP, respectively. These percentages have not varied greatly over the last decade ^{[3] [4]}. The country’s sovereign credit rating was B+ ^[5]. Tourism accounts for the majority of the services sector: “In 2006, the tourism industry made up 18 percent of GDP while the number of inbound tourists increased by 14 percent” ^[6]. That year, the unemployment rate was 3.2% and the inflation rate was 6% ^[7]. The private sector in 2007 accounted for over 80% of the GDP ^[8].

In 1991, Mongolia established its own stock exchange, which maintains its status as the world’s smallest. The Soviet Union supported Mongolia’s economy, accounting for a third of the GDP until complete withdrawal in 1991 when the USSR was dismantled. The economy then underwent a short recession intensified by natural disasters, but political reform allowing free-market economics and extensive privatization curbed the recession. Subsequently, however, summer droughts, severe winters, opposition to privatization, and falling export prices then caused GDP growth to fall to zero at the turn of the millennium. In 2003, Mongolia settled its debt to Russia in good terms by paying a drastically reduced amount of the USD 11 billion that it owed. The economic recession subsided by 2004, when copper and gold prices soared ^[9].

Mongolia’s economy remains largely tied to that of Russia and China, as it buys 95% of its petroleum products and significant electricity from the former and a large amount of food from both. The inflation rate in 2007 was 15% (2.5X up from previous year) as a result of increased fuel and food prices. 70% of Mongolia’s exports go to China, and money laundering as well as the number of Mongolians illegally working in China are an increasing concern of both governments. Mongolia has proven determined to increase its participation in the World Trade Organization since its joining in 1997 . Mongolia secured USD 300 million from the international donor community in 1999 at a meeting held in Ulaanbaatar ^[10], and it received USD 15.3 million from the World Bank on July 16th, 2008, to finance its Rural Education and Development Project (USD 1 million), its Mining Sector Technical Assistance Project (USD 9.3 million), and its Enhanced Justice Sector Services Project (USD 5 million) ^[11]

[edit] References

1. ↑ The CIA World Factbook. Accessed July 2008
2. ↑ The World Bank Classifications List. Accessed July 2008
3. ↑ The CIA World Factbook. Accessed July 2008
4. ↑ Statistical Yearbook of Mongolia 2006, National Statistical Office, Ulaanbaatar, 2007
5. ↑ Infrastructure Strategy Review: Making Choices in Provision of Infrastructure Services. Government of Mongolia - External Partners Technical Meeting. October 10, 2006.
6. ↑ Economy and Trade as of end 2006. Embassy of Mongolia, Washington D.C. Accessed July 2008.
7. ↑ Cheng, Patricia. "Mongolian bourse seeks foreign investment", International Herald-Tribune. 2006-09-19.
8. ↑ "Building Trust in Government. 7th Global Forum on Reinviting Government. United Nations Headquarters, Vienna. 26-27 June 2007.
9. ↑ The CIA World Factbook. Accessed July 2008
10. ↑ The CIA World Factbook. Accessed July 2008
11. ↑ "Mongolia received $15 million World Bank grant". Mongolia Web. 16 July 2008. Accessed July 2008.