Mongolia's economy to grow 4.8% in 2024 despite agricultural challenges

Domestically, increased fiscal spending and rising household incomes may contribute to heightened inflationary pressures throughout 2024.

The World Bank's latest semi-annual Mongolia Economic Update forecasts a 4.8% growth in Mongolia's economy for 2024, driven primarily by a robust mining sector and strong private consumption. This projection comes on the heels of a 7.1% economic expansion in 2023, largely fueled by coal mining and associated transportation services.

Despite challenges in the agricultural sector due to harsh climatic conditions, Mongolia's medium-term economic outlook appears positive. Growth is expected to average 6.4% over 2025-2026, buoyed by an anticipated increase in production at Oyu Tolgoi, Mongolia’s largest copper mine.

However, the report notes significant downside risks that could affect this positive trajectory. A slowdown in global growth, particularly in China—a major market for Mongolian exports—could reduce demand for these goods. Additionally, geopolitical tensions may drive up imported oil prices, further straining the economy.

The agricultural sector is already facing pressures from a weather phenomenon known as the dzud, which involves extreme cold and heavy snowfall, leading to the largest livestock losses since 2010. A more severe or prolonged dzud could exacerbate the contraction in agricultural production.

Domestically, increased fiscal spending and rising household incomes may contribute to heightened inflationary pressures throughout 2024. While Mongolia's economic situation improved in 2023 due to the mining-led recovery, the World Bank emphasizes the need for structural reforms to enhance macroeconomic resilience and promote sustainable, inclusive growth.

"The increasing frequency and intensity of natural disasters, such as harsh winters and floods, underscore the urgent need for robust institutions, policies, and investments geared towards enhancing the nation’s resilience to climate change," stated Taehyun Lee, World Bank Country Manager for Mongolia. The focus remains on adapting to these challenges to ensure the ongoing health of Mongolia’s economy.