The mining boom and bust

Mongolia's growth chart shows one of the largest swings among the countries in the dataset. Investment in the giant Oyu Tolgoi copper and gold mine, and strong coal exports to China, pushed real GDP growth to 17.3 percent in 2011. When commodity prices fell and Chinese demand slowed from 2014, growth fell sharply, foreign direct investment dried up and the Bank of Mongolia lost reserves defending the tugrik, which depreciated by about a third. By 2017 the country had agreed on an Extended Fund Facility with the IMF, and the central bank tightened policy and moved to a more flexible exchange rate. The boom and its aftermath illustrate how dependent a small economy can be on a single export market and a few mines, and why the central bank has had to balance inflation control against the need to protect reserves.