ULAANBAATAR, May 23, 2025 - The World Bank's latest Mongolia Economic Update projects the country's economy to grow by 6.3 percent in 2025, supported by a surge in copper production and a gradual recovery in the agriculture sector.
In 2024, Mongolia's economy grew by 5 percent, marking a moderation from 7.2 percent in 2023, largely due to a sharp contraction in the agriculture sector caused by a severe dzud (harsh winter). Mining, transport, and services remained strong, with a significant increase in coal output and copper production at Oyu Tolgoi, the country's largest copper mine, surging following the expansion of underground operations.
On the demand side, growth in 2024 was supported by public consumption and investment, along with rising household incomes that boosted private consumption. As a result of strong domestic demand imports outpaced exports, leading to a negative contribution from net exports. Robust domestic demand, coupled with supply-side pressures, also pushed inflation up to 9.1 percent by March 2025.
Looking ahead, the medium-term growth outlook is expected to remain stable, with growth projected to average 5.2 percent over 2026-2027. The mining sector is anticipated to expand further in 2025, while the agriculture sector is expected to recover moderately after two years of dzud-related losses. However, consumption growth is projected to slow, reflecting weaker income growth and higher inflation, which is weighing on household purchasing power.
The report underscores that the outlook is subject to significant risks. Global trade policy uncertainty could weaken demand in major trading partners, lower prices for key commodities, and impact Mongolia's export earnings, fiscal revenues, and investor sentiment. On the domestic front, higher public and quasi-fiscal spending may support short-term growth but could widen fiscal and external deficits and add to inflationary pressures.
"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, paving the way for a more resilient and diversified economy," said Taehyun Lee, World Bank Country Manager for Mongolia. "As part of broader efforts to strengthen resilience against future shocks, including weather-related disasters, effective disaster risk management is also crucial for Mongolia's long-term growth."
The report also emphasizes the need to maintain price stability and enhance coordination between the central bank and regulators to safeguard financial stability, while outlining priority actions to improve disaster risk management and resilience to natural hazards.
