Mongolia’s white-hot economic growth has cooled this year as the ripple effects of the global economic downturn -- and especially slowing Chinese growth -- start to hit home.
Resource-rich Mongolia defied the global economic gloom to notch stunning 17.3 per cent GDP growth in 2011 on soaring coal shipments to its energy-hungry giant neighbour and a surge in foreign investment in its minerals sector.
But growth eased to 13.2 per cent in the first half of this year, and while that is still among the world’s highest rates, questions are being asked about its heavy dependence on coal exports to China, where economic growth is slowing.
Mongolian coal exports have leapt in recent years on voracious Chinese demand, and grew 27.5 per cent in 2011 to 21.3 million tonnes, according to government figures, nearly all of it going across its southern frontier to China.
But China’s usually turbo-charged growth rates have slowed significantly this year, sapping coal demand, contributing to a 10-15 per cent decline in Mongolian coal prices this year and trimming the country’s coal export projections.
“We are now hoping that we can equal last year’s export numbers, but it’s unlikely that we’ll be able to beat those figures,” said Damjin Damba, president of the Mongolian National Mining Association.
Ninety-two per cent of the country’s total exports go to China, according to Mongolian government data, and nearly all of that consists of coal.