Mongolia’s Economic Growth Set to Accelerate in 2025 Amid Mining Surge and Agricultural Recovery

Mongolia’s economy is on track for a robust rebound in 2025, with the World Bank projecting a 6.3 percent growth rate, driven by rising copper output and a gradual revival in the agriculture sector. This marks a notable acceleration from the 5 percent GDP growth recorded in 2024, which itself reflected a slowdown from the impressive 7.2 percent expansion in 2023.

Economic Drivers and Sectoral Performance

The World Bank’s latest Mongolia Economic Update attributes the brighter 2025 outlook primarily to the ongoing mining boom, especially the underground expansion of Oyu Tolgoi, Mongolia’s flagship copper mine. This expansion has significantly boosted copper production and reinforced the mining sector’s central role in national growth.

Meanwhile, Mongolia’s agriculture sector—which suffered heavily in 2024 due to a severe dzud, a harsh winter resulting in high livestock mortality—shows signs of a gradual recovery. Despite last year’s setback, other sectors such as transportation and services remained resilient, supported by strong coal production and domestic demand.

On the demand side, 2024 saw growth driven largely by robust public consumption and investment. Household incomes also improved, lifting private consumption. However, the surge in domestic demand led to a widening trade deficit, as imports outpaced exports, contributing negatively to net exports. Simultaneously, inflation climbed to 9.1 percent by March 2025, spurred by strong demand and lingering supply-side constraints.

Outlook for 2025 and Beyond

Looking ahead, Mongolia’s medium-term economic prospects remain generally positive, with annual growth forecast to average 5.2 percent in 2026 and 2027. The mining sector is expected to continue its upward trajectory, supported by strong international demand for copper—a critical material for green energy technologies and infrastructure.

Agriculture is anticipated to regain momentum gradually, although full recovery could take time as households and herders rebuild herds and mitigate the effects of consecutive climate shocks. However, consumption growth may begin to slow in the coming years, influenced by reduced real income growth and elevated inflationary pressures, which are likely to dampen household purchasing power.

Risks and Policy Recommendations

The World Bank cautions that significant downside risks cloud the economic outlook. Externally, global trade policy uncertainty—particularly among Mongolia’s major trading partners like China—could weigh on commodity prices and reduce export revenues. Internally, continued high levels of public and quasi-fiscal spending, while supportive of short-term growth, risk exacerbating fiscal and external imbalances and stoking inflation further.

“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.

Building Long-Term Resilience

The report emphasizes the urgency of strengthening economic resilience by enhancing coordination between monetary and fiscal authorities. Maintaining price stability will require careful calibration of monetary policy by the central bank in tandem with prudent regulatory oversight to ensure financial sector stability.

A crucial component of long-term growth, according to the World Bank, lies in bolstering Mongolia’s capacity for disaster risk management. With dzuds and other climate-related shocks becoming more frequent and severe, the report advocates for strategic investments in weather forecasting, early warning systems, and climate-resilient infrastructure. These measures would not only protect vulnerable rural populations but also reduce the economic volatility associated with recurring natural disasters.

Mongolia stands at a pivotal juncture in its economic development. With the mining sector offering strong short-term growth prospects and agriculture beginning to recover, policymakers have a timely window to implement reforms that promote macroeconomic stability, fiscal discipline, and environmental resilience. Leveraging these opportunities could place Mongolia on a more sustainable and inclusive growth path for the decade ahead.