Mongolia

Plans for a large power plant near Ulaanbaatar underline how Mongolia’s surging growth in resource revenues can be used to meet looming energy shortfalls in urban areas. However, more innovative sources are needed to supply power to the rural expanses of the country’s steppes.

The recent implementation of monetary tightening measures has seen confidence in the stability of Mongolia’s banking system rise in recent months as credit growth slows. However, exponential growth expected in the economy due to an influx of resource revenues will require the central bank to maintain strict macroeconomic vigilance.

Healthy trade figures and predictions that Mongolia will rank among the world’s top-10 fastest-growing economies in the next 40 years has been the source of confidence in the country’s long-term financial potential. However, concerns over trade, regulatory uncertainty and budget deficits threaten the outlook for the near term.

The government’s approval of a bond release over the next two years to help fund major infrastructure projects should provide a much needed boost to the construction housing and transport sectors, with affordable housing and road connectivity cited as top policy concerns.

Expectations that Mongolia’s retail industry will be transformed by the nation’s rapidly growing mining sector appear on track, although rising inflation and a lack of human resources could threaten the sector’s potential.

As government programmes expand basic insurance coverage in Mongolia, economic growth spurred by resource revenues is expected to create surging demand in the private insurance market. However, ensuring the latter is managed by appropriate legislation represents a challenge to regulatory bodies.