ULAANBAATAR, May 10, 2024 — Mongolia’s economy is projected to grow by 4.8% in 2024 as an expanding mining sector, robust private consumption, and fiscal expansion offset a contraction of the agriculture sector caused by harsh climate conditions, according to the World Bank’s latest semi-annual Mongolia Economic Update.
Mongolia’s economy expanded by 7.1% in 2023, mainly driven by coal mining and related transportation services. The country’s medium-term growth outlook remains favorable, with economic growth expected to average 6.4% over 2025-2026, driven by an increase in production at Oyu Tolgoi, the country's largest copper mine, the report said.
The outlook is subject to significant downside risks. Globally, slower-than-expected growth, especially in China could dampen demand for Mongolian exports. An escalation of geopolitical tensions could result in higher prices for imported oil.
A weather phenomenon known as the dzud, characterized by extreme cold and heavy snowfall, has already caused Mongolia’s largest livestock losses since 2010 and is weighing on the agriculture sector. A more severe and prolonged dzud would lead to a greater contraction in agriculture production.
Domestically, fiscal expansion and rising household incomes are expected to elevate inflationary pressures in 2024.
While the recent mining-led recovery resulted in an improved macro-fiscal situation in 2023, structural reforms remain fundamental 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 World Bank Country Manager for Mongolia Taehyun Lee.
