Through democratization, liberalization and a certain amount of geographical good fortune, Mongolia is recognized as one of the fastest growing economies in the world, achieving a GDP growth rate of 12% in 2012 and 11.7% in 2013.
Just twenty years ago, a newly democratized Mongolian state was struggling to survive a transformation recession as its previously subsidized agricultural enterprises were forced to face international competition.
Today, through market liberalization, democratization and a certain amount of geographic good fortune, the country is recognized as one of the world’s fastest growing economies.
Mongolia achieved real GDP growth of 17.3% in 2011, significantly outperforming every one of the BRIC economies. The World Bank puts growth in 2012 at 12.3%, in comparison to 5.8% across the BRICs, and 2.5% worldwide. Growth reached 11.7% in 2013. However, Mongolia's explosive growth was short lived as commodity prices started to decline due to weakening Chinese demand and FDI has fallen dramatically due to concerns of the Oyu Tolgoi phase 2 deal with Rio Tinto.
In 2014, Mongolia grew 7.8% and in 2015, Mongolia grew 3.2%. World Bank and IMF are already predicting Mongolia will grow at double digits again from 2018 onwards. One of the main reason for this growth is that Oyu Tolgoi 2nd phase of the underground mine has started in 2016 and once the production is at full capacity by 2022, then the mining output will contribute more than 30% of Mongolia's GDP.
The extraction of Mongolia’s previously latent resources have allowed deposits to be converted into tangible wealth, as exports reached a record high of US$4.8bn at the end of 2011, up from just US$2.5bn four years earlier. Coal outflows were valued at US$2.2 billion in 2011, more than twice the total of the previous year (US$0.9 billion), whilst the contribution of copper to the Mongolian current account increased by 25% over 2011 (although much benefit was derived from the commodity’s price increase over the period).
Growth has been facilitated by the easing of the country’s production constraints by capital and expertise inflows from a number of multi-national mining corporations. Levels of FDI have surged, reaching 39% of GDP in 2011. Forecasts based upon Q1 results expect this figure will be exceeded in 2012, as foreign direct investment is predicted to be US$4.4bn (roughly half of the country’s GDP).