The World Bank's latest report projects Mongolia's economy to grow by 6.3% in 2025, driven by increased copper production and a gradual recovery in the agriculture sector. The previous year saw a 5% growth, down from 7.2% in 2023, primarily due to a severe winter impacting agriculture. Mining activities remained robust with notable coal output and copper production at Oyu Tolgoi.
Public consumption and investment fueled demand-side growth in 2024, alongside rising household incomes boosting private consumption. However, imports outpaced exports, resulting in a negative net export contribution. Strong domestic demand combined with supply-side pressures led to an inflation rate of 9.1% by March 2025.
The medium-term outlook predicts stable growth averaging 5.2% for 2026-2027, with mining expected to expand further while agriculture recovers moderately from recent harsh winters. Consumption growth is projected to slow due to weaker income growth and higher inflation affecting purchasing power.
Significant risks could affect this outlook, including global trade policy uncertainties that may reduce demand from major trading partners and impact commodity prices, export earnings, fiscal revenues, and investor sentiment. Domestically, increased public spending might support short-term growth but could also widen fiscal deficits and increase inflationary pressures.
Taehyun Lee, World Bank Country Manager for Mongolia stated: "Amid the ongoing mining boom, Mongolia’s macroeconomic outcomes have improved. However, heightened global uncertainty underscores the importance of seizing this opportunity to accelerate fiscal and structural reforms." He emphasized effective disaster risk management as crucial for long-term growth resilience against future shocks.
The report highlights the necessity of maintaining price stability and enhancing coordination between the central bank and regulators to ensure financial stability while recommending priority actions for improving disaster risk management.