Mongolia’s economy to grow 4.8% in 2024 as mining sector expands: World Bank

According to the World Bank’s latest semi-annual Mongolia Economic Update, Mongolia’s economy is poised to grow 4.8% in 2024, supported by significant progress in the mining sector and robust private consumption, despite setbacks in agriculture. due to severe weather conditions.

In 2023, Mongolia witnessed a commendable economic expansion of 7.1%, largely driven by coal mining and its associated transportation services. The report foresees a promising medium-term outlook, with an average expected growth rate of 6.4% for 2025-2026. This optimistic projection is mainly attributed to increased production at Oyu Tolgoi, Mongolia’s largest copper mine.

However, the economic forecast faces substantial risks, including possible global slowdowns that could particularly impact demand from China, Mongolia’s largest trading partner. Additionally, geopolitical tensions could cause oil prices to rise, putting further pressure on the economy.

Internally, Mongolia is grappling with the consequences of dzud, a devastating climate phenomenon involving extreme cold and heavy snowfall that caused significant livestock losses, the worst since 2010. This phenomenon has put considerable pressure on the agricultural sector, with the possibility of more being produced. severe impacts if harsh conditions persist.

The World Bank also highlighted growing domestic challenges, such as fiscal expansion and rising household incomes, which are expected to push inflation higher in 2024. Despite a mining-led recovery that will improve the macrofiscal outlook In 2023, Mongolia faces the need for structural reforms. to achieve long-term macroeconomic stability and foster sustainable growth.

Taehyun Lee, World Bank country director for Mongolia, emphasized the urgency of addressing climate impacts. “The increasing frequency and intensity of natural disasters, including consecutive harsh winters and floods last year, require greater attention to strengthening institutions, policies and investments to strengthen Mongolia’s resilience in the face of climate adversities” said Lee.

This comprehensive economic update highlights both the opportunities and challenges Mongolia faces as it navigates its environmental and development hurdles.