Mongolia

Banks in Mongolia are facing weaker profits this year as one of Asia's fastest growing economies cools, triggering a downpour of higher borrowing costs and an increase in non-performing loans, while credit rating agencies are watching the banks' vulnerability to China's continued economic slowdown.

The insurance sector in Mongolia is heading for consolidation with higher capital requirements likely to squeeze out smaller operators in a crowded market. However larger firms can look forward to solid growth prospects as penetration rates remain low and product awareness is on the rise.

Strong demand at home and abroad could prompt higher investment in Mongolia’s dairy industry as the country strives to return to self-sufficiency in milk, as well as capitalise on export potential in the region. 

Recent visits to Mongolia by Chinese and Russian Presidents, Xi Jinping and Vladimir Putin, have cemented deals that may see the mineral-rich country double trade with its neighbours and achieve a wider market reach for its exports through the overhaul and expansion of its ageing rail network.

In a bid to lower trade barriers and eliminate Customs duties, Mongolia has struck its first major trade deal with Japan, which could pave the way for a broader network of free trade agreements (FTAs) while also boosting its chances of becoming a trade and logistics hub in the years to come.

Changes to Mongolia’s mining legislation will open up vast new tracts of land for exploration and pave the way for new licence issuances. This should help restore the confidence of foreign investors made wary by government intervention in the sector.