Mongolia's rapid growth masks its vulnerability

While fears have mounted about a double-dip recession in the US and Europe, Mongolia’s small, open economy grew a staggering 17.3% year-on-year during the first half of 2011, according to a World Bank report released late last week.

The country’s booming copper and coal mining industry is driving the economy, but at the same time makes it vulnerable to a global downturn. Mining comprises 22% of overall GDP and the sector expanded 40% in 2010, despite continued political controversy about how best to exploit the natural riches held in the two vast mining complexes of Oyu Tolgoi copper and Tavan Tolgoi coal.

The surge in economic...