Business Monitor International


Mongolia Business Forecast Report

Published 19 November 2014

  • 29 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Mongolia Business Forecast Report

Core Views

  • Persistent uncertainties clouding Mongolia's political and business environment outlook suggest that downside risks remain to our real 2014 and 2015 GDP forecast of 9.8% and 8.0% respectively. Our core scenario remains for an agreement for the Oyu Tolgoi (OT) mine expansion to be reached by end-2014 although we note downside risks that further delays could mean that an agreement will only be reached after parliamentary elections in 2016. Indeed, rising domestic opposition from both within the ruling coalition and bureaucrats threatens to prevent the government from passing the legislative changes needed to restore investor confidence in the economy.

  • The Togrog remains under immense depreciatory pressures, with the latest dispute between Rio Tinto and the Mongolian government (over alleged tax evasion) further weakening the unit in addition to the 10% losses since the beginning of 2014. We believe that fundamental and technical factors continue to suggest that the currency will remain on a depreciatory trend for 2014, but expect the unit to see some respite when an agreement for the OT mine expansion is reached by end-2014.

  • Headline inflation is now firmly in double-digit territories, stoked by the Togrog's depreciation and the government's housing stimulus. With its latest 150 basis points (bps) hike, we do not expect the Bank of Mongolia (BoM) to raise rate beyond the current 12.00%, especially with credit growth waning and growth remaining a priority for the monetary authority.

  • The Mongolian government continues to make considerable expenditure through the Development Bank of Mongolia (DBM), which is operating off-budget. We remain doubtful about whether the authorities will be able to keep within the 2% of GDP structural deficit limit mandated by the Fiscal Stability Law (FSL), and note that the government is facing increasing political and social pressure to further increase its fiscal spending to offset the impact from the weakening...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
Unrest Increases Risks To Government's Policy-Making Ability
8
TABLE: POLITICAL OVERVIEW
8
Long-Term Political Outlook
9
Transforming Minerals Into Wealth
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
Downgrading Growth On Oyu Tolgoi Delays And Export Headwinds
14
TABLE: Economic Activity
14
Fiscal Policy
15
Fiscal Sustainability At Risk
15
TABLE: Fiscal Policy
16
Monetary Policy
17
BoM To Hold Rates Until Disputes Resolved
17
TABLE: Monetary Policy
17
Balance Of Payments
18
MNT: Inflation And Investor Concerns Warrant Bearish Outlook
18
TABLE: CURRENCY FORECAST
18
TABLE: Current Account
19
Chapter 3: 10-Year Forecast
21
The Mongolian Economy To 2023
21
Fierce But Volatile Growth In Store
21
TABLE: Long-Term Macroeconomic Forecasts
21
Chapter 4: Business Environment
23
SWOT Analysis
23
BMI Business Environment Risk Ratings
23
Chapter 5: BMI Global Assumptions
25
Global Outlook
25
Growth Increasingly Polarised
25
Table: Global Assumptions
25
Tab le: Developed States , Rea l GDP Growt H, %
26
Tab le: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
26
Tab le: Emerging Mar kets , Rea l GDP Growth , %
27

The Mongolia Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Mongolia and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..

An influential new analysis of Mongolia's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Mongolia's economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Mongolia's country risks against regional peers using BMI's country comparative Risk Ratings system.
  • Evaluate external threats to doing business in Mongolia, including currency volatility, the commodity price boom and protectionist policies.

The Mongolia Business Forecast Report by Business Monitor International (BMI) includes three major sections: Economic Outlook, Political Outlook and Business Environment.

Economic Outlook:

How will the Mongolian economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for Mongolia through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Mongolia Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Ratings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2017 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Mongolia and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Mongolia, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Mongolia over the next 5-years?

BMI's Mongolia country Risk Ratings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Mongolian Market - Political Strengths, Weaknesses, Opportunities and Threats facing Mongolia.
  • Political Stability and Risk Assessment - BMI's Risk Ratings assess explicit short- and long-term risks to political stability; latest ratings, rankings and trends for Mongolia's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Mongolia's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Ratings with SWOT Analysis - Business environment Risk Ratings for Mongolia, benchmarked against ratings for regional neighbours.

Country Competitiveness - Competitiveness of Mongolia's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Ratings.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express