Mongolia's economy is forecasted to grow by 4.8% in 2024, fueled by a thriving mining sector, robust private consumption, and fiscal expansion which counterbalance the agricultural sector's contraction due to severe climatic conditions. This projection comes from the World Bank's latest semi-annual Mongolia Economic Update.
In 2023, Mongolia's economy grew by 7.1%, primarily propelled by coal mining and related transportation services. The country's medium-term growth outlook remains positive, with economic growth predicted to average 6.4% over 2025-2026. This growth is expected to be driven by increased production at Oyu Tolgoi, the country's largest copper mine.
However, this outlook faces significant downside risks. On a global scale, slower-than-anticipated growth, particularly in China, could reduce demand for Mongolian exports. Additionally, an escalation of geopolitical tensions could lead to higher prices for imported oil.
Domestically, Mongolia has been grappling with a weather phenomenon known as the dzud—characterized by extreme cold and heavy snowfall—which has resulted in the country’s largest livestock losses since 2010 and has put pressure on the agriculture sector. A more severe and prolonged dzud would result in a greater contraction in agricultural production.
Moreover, fiscal expansion and rising household incomes are projected to increase inflationary pressures in 2024.
Despite the recent recovery led by mining which improved the macro-fiscal situation in 2023, structural reforms remain crucial for achieving macroeconomic resilience and fostering sustainable and inclusive growth.
"The increasing frequency and intensity of natural disasters, as evidenced by the harsh winters over two consecutive years and last year’s floods, call for attention to institutions, policies, and investments to make the country more resilient to the adverse impacts of climate change," said Taehyun Lee, World Bank Country Manager for Mongolia.