Mongolia and ADB

ADB’s partnership strategy for Mongolia focuses on promoting inclusive growth and economic opportunity, investing in critical infrastructure, and building climate and economic resilience.

Economic forecasts for Mongolia

Figures are based on the latest edition of ADB's Asian Development Outlook, which analyzes economic and development issues in Asia and the Pacific. This includes forecasting the inflation and gross domestic product growth rates of economies throughout the region.


 

Comparative economic forecasts

The latest available economic data for Mongolia compared to countries in East Asia.


 

Policy Challenge—Increasing Climate Investment

Mongolia is committed to reducing its greenhouse gas emissions and increasing resilience to climate change by investing in climate change mitigation and adaptation. Climate change mitigation poses a significant challenge, with Mongolia the 17th highest per capita contributor of greenhouse gas emissions, of which 44.8% is related to generating energy from coal and 52% from agriculture. The nation is also particularly vulnerable to the impacts of climate change, with rising temperatures and increasing aridity threatening the traditional nomadic herding lifestyle that many Mongolians depend on. The average air temperature increased by 2.5°C over the past 80 years in Mongolia, and climate model projections suggest it will warm up to 4.5°C by 2050. Under its nationally determined contribution (NDC) under the Paris Agreement, Mongolia is targeting a 22.7% reduction in emissions by 2030, compared to the business-as-usual scenario and significant investments in climate resilience.

Achieving the NDC goal requires substantial investment financing which is far from assured. It is estimated that Mongolia needs $11.5 billion in climate investments, of which $5.2 billion is for adaptation and $6.3 billion for mitigation. However, accelerating climate investments is not without its challenges. The country faces several barriers to attract the necessary funding, including a lack of institutional capacity, limited experience with climate finance, and a regulatory environment not always conducive to investment. In addition, the country’s heavy reliance on fossil fuels, particularly coal, makes the transition to a low-carbon economy particularly complex, and the economy’s dependence on revenues from coal exports introduces new economic vulnerabilities resulting from the global shift to net-zero.

Despite these challenges, there are significant opportunities for increasing and speeding up climate-related investments. The country has abundant renewable energy resources—including solar, wind, and hydropower—which could provide a sustainable low-carbon alternative to fossil fuels. Mongolia’s vast grasslands also offer opportunities for carbon sequestration through improved livestock management and restoration of degraded lands.

To capitalize on these opportunities, Mongolia must strengthen its institutional capacity and improve its investment climate. This could include reforms to streamline regulatory processes, enhance transparency, and provide greater certainty for investors. The country is considering introducing a climate law, which can serve as a powerful tool to drive climate action and facilitate investment in low-carbon development. By establishing clear emission reduction targets, creating a comprehensive policy framework that incentivizes climate-friendly practices, and strengthening institutional arrangements, the law can foster an environment that promotes sustainable growth. In addition, the law can ensure transparency and accountability through reporting requirements and independent reviews, while also demonstrating the government’s commitment to addressing climate change. Mongolia can also integrate NDC priorities into its public investment program and support sector agencies to identity, prioritize, and design annual and medium-term climate investments. Mongolia has already developed a green taxonomy—a classification system that defines and categorizes economic activities, investments, or projects based on their environmental impact and sustainability—which could be expanded to include economic activities aligned with sustainable development goals. Finally, Mongolia can explore innovative financing mechanisms, such as green bonds or public-private partnerships, to attract the necessary capital.

International support will be crucial in helping Mongolia accelerate climate investment. Multilateral development banks can provide financing and technical assistance to help the country build capacity and develop low-carbon infrastructure. In addition, Mongolia can learn from the experience of other countries that have successfully attracted climate finance and implemented low-carbon development strategies.

More resources

Asian Development Bank and Mongolia: Fact Sheet

Asian Development Bank and Mongolia: Fact Sheet

The Fact Sheets summarize ADB's partnerships with member economies, providing key facts and figures and an overview of activities and future directions.

Asian Development Outlook (ADO) April 2024

Asian Development Outlook

The Asian Development Outlook analyzes economic and development issues in developing countries in Asia.

Key Indicators for Asia and the Pacific 2023

Key Indicators

The Key Indicators for Asia and the Pacific publication presents data regarding the economic, financial, social, and environmental situations in a broad range of countries across the region.

Basic Statistics 2024

Basic Statistics

The Basic Statistics brochure presents data on selected social, economic, and SDG indicators such as population, poverty, annual growth rate of gross domestic product, inflation, and government finance for economies in Asia and the Pacific.