ULAANBAATAR, MONGOLIA (20 September 2023) — Mongolia’s economic recovery continued through this year and gross domestic product (GDP) growth will be maintained in the near term, according to a new report by the Asian Development Bank (ADB). It is anticipated to be driven by robust external demand, recovery in exports, and revived domestic demand, though tempered by persistently high inflation, contractionary monetary policy, and tight domestic financing conditions. 

In its Asian Development Outlook (ADO) September 2023, the growth forecast for 2023 is revised up slightly from the projection of 5.4% in April to 5.7%, but revised down to 5.9% for 2024, from the previous forecast of 6.1%. GDP growth in 2024 will be driven by mining, with positive spillover into transport and other services, as well as private sector lending. 
“Although recovery was uneven in terms of sector contributions, the economy’s near-term growth prospects remain robust,” said ADB Senior Country Economist for Mongolia Edward Faber. “Maintaining price stability, improving employment, and strengthening economic resilience through structural reforms are imperative to make growth more sustainable and inclusive.”

Economic expectation and visibility in Mongolia have improved since the beginning of this year, mainly due to reopening in the People’s Republic of China (PRC), subsequent recovery in exports, significant improvements in the current account balance, rebounding of foreign exchange reserves and lowered risks associated with the external debt repayment.    

However, inflation remained high and above the central bank’s target for the past 27 consecutive months despite recent moderations. Inflation is likely to trend downward in the second half of 2023, though average inflation will remain high at 10.5% for this year before moderating to 8.6% for 2024, revised down slightly from the previous projections in April. 

Downside risks to the outlook would arise from any decrease in the PRC’s demand for bulk commodities, a fall in coal and metals prices, new trade restrictions, disruption caused by exacerbated geopolitical tensions, negative spillover from tighter financing conditions, global uncertainty and slowdown, or capital flow reversal.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

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