Mongolia Economic Outlook
The economy should have recorded a sixth consecutive quarter of strong annual growth in Q3, buoyed by booming commodities trade with China, a burgeoning tourism sector and the large hikes in wages, social benefits and pensions outlined in June’s supplementary budget. Looking at available data, in Q3, coal exports—which were worth over a quarter of total exports in 2021—were up 176% year on year, with coal production surging in tandem. In addition, copper output and visitor arrivals rose in Q3. On the flipside, iron and gold production fell in the quarter. In October, the Asian Development Bank approved a USD 100 million loan to strengthen Mongolia’s fiscal position, while the French firm Orano signed a USD 1.7 billion deal to mine uranium in the country, and the government published an expansionary 2024 budget. All these developments bode well for future economic growth.
Inflation rose to 10.1% in September from 10.0% in August, above the Central Bank’s 4.0–8.0% target range. Inflation will likely remain above target in 2024 on a large projected increase in government spending coming on top of the rises in wages, benefits and pensions implemented in June. However, softer average commodity prices should keep a lid on price pressures.