Mongolia’s economic growth is expected to be supported this year by a recovery in livestock numbers and the expansion of the Oyu Tolgoi underground mine. However, weaker coal exports and reduced government spending have prompted the Asian Development Bank (ADB) to revise down its growth forecasts. According to the September 2025 Asian Development Outlook report, Mongolia’s growth is projected at 5.7% in both 2025 and 2026, compared with earlier forecasts of 6.6% and 5.9%. Weak demand for export minerals, particularly coking coal, is influenced by higher tariffs and trade restrictions affecting steel production in China, while government spending cuts are expected to dampen consumption and public investment for the rest of the year.
Despite global uncertainties, ADB emphasizes that Mongolia’s economic growth remains resilient. Shannon Cowlin, ADB Country Director for Mongolia, highlighted the importance of fostering broad-based and diversified growth while addressing vulnerabilities related to mineral dependence and commodity market volatility.
In the first half of 2025, Mongolia’s growth was largely driven by a recovery in herd sizes under favorable weather conditions. Mining contributed less due to slowing coal exports, whereas non-mining sectors, including energy and construction, showed expansion. For the remainder of 2025, growth is expected to be supported by services and non-mining industries, although lower crop harvests may limit agricultural recovery. In 2026, economic expansion is projected at 5.7%, primarily driven by services, while mining performance may fall short of earlier expectations.
Inflation remained above the central bank’s target range during the first half of 2025 due to residual effects from regulated price hikes. Consumer prices are forecast to rise by 8.6% in 2025, slightly below the previous estimate of 9.1%, with the postponement of utility tariff increases delaying further pressures until next year. Inflation for 2026 is projected at 7.2%, with price pressures particularly affecting domestic food and imported goods.
Key risks to Mongolia’s economic outlook include additional restrictions on China’s steel production, potential delays in the development of the Oyu Tolgoi mine, and the possibility of a harsh winter in 2025–2026 that could impact agricultural output. The ADB, as a leading multilateral development bank, continues to support inclusive, resilient, and sustainable growth across Asia and the Pacific through innovative financial tools, strategic partnerships, and collaborative solutions to complex development challenges.
Related Posts
