Mongolian economic growth slowed last year to 12.3 percent after moderating expansion in China curbed demand for its exports of coal.
Gross domestic product, as measured by production, grew last year to 13.9 trillion tugrik ($10 billion), the National Statistical Office of Mongolia said on its website today. The country’s exports fell 9 percent to $4.38 billion and imports rose 2.1 percent to $6.74 billion, resulting in a trade deficit of $2.35 billion, according to the statistics office.
A mid-year decline in the price of coal, the nation’s biggest export product, was the largest reason for the slowdown from 2011’s record 17.3 percent pace of expansion, said Coralie Gevers, the World Bank’s country director for Mongolia. Slower economic growth in China, which buys 92 percent of Mongolia’s exports, also contributed.
“There was a global slowdown which they could not avoid,” particularly a drop in coal exports to China, Gevers said in a telephone interview from Ulan Bator. The growth rate “is along the lines of what was expected by the IMF and the World Bank. It’s still among the highest rates in the world. GDP growth is not going to be a problem over the next few years.”
Measured by expenditures, Mongolia’s GDP expanded 12.2 percent to 14.6 trillion tugrik, according to the statistics bureau. Gevers said the World Bank uses GDP figures measured by production for its analysis.
Mongolia’s economic growth has been driven by a mining boom and influx of capital to bankroll major projects, such as the $6 billion Oyu Tolgoi copper and gold mine operated by Rio Tinto Group. A milestone was reached in December when the mine’s concentrator was turned on, starting a process that will allow the mine to export copper concentrate later this year.
Mongolia’s other flagship project has not fared as well. Erdenes Tavan Tolgoi LLC, which is developing the nation’s largest coal field, has had to delay its initial public offering because of weak capital markets. In addition, the Mongolian government’s talks to bring in foreign investors including St. Louis-based Peabody Energy Corp. and China’s Shenhua Group Corp. to develop the coal deposit have stretched 17 months without an agreement.
Last year’s GDP growth rate is a concern, Dale Choi, an analyst at private equity company Origo Partners, said in a telephone interview from Ulan Bator. “A lot of this is from investment stalling, a weak external environment and a weak internal environment as well,” Choi said.