ADB Projects Sustained Economic Growth Momentum in Mongolia for 2023–2024Economy
Ulaanbaatar, September 20, 2023 /MONTSAME/. Mongolia’s economic recovery continued through this year and gross domestic product (GDP) growth will be maintained in the near term, according to Asian Development Outlook (ADO) September 2023, released today. It is anticipated to be driven by robust external demand, recovery in exports, and revived domestic demand, though tempered by persistently high inflation, contractionary monetary policy, and tight domestic financing conditions.
In its Asian Development Outlook (ADO) September 2023, the growth forecast for 2023 is revised up slightly from the projection of 5.4 percent in April to 5.7 percent, but revised down to 5.9 percent for 2024, from the previous forecast of 6.1 percent. GDP growth in 2024 will be driven by mining, with positive spillover into transport and other services, as well as private sector lending.
Economic growth in Asia and the Pacific is expected to remain solid, although risks to the outlook are rising, according to the ADB report. The region’s developing economies are forecast to grow 4.7 percent this year, a slight downward revision from a previous projection of 4.8 percent. The growth forecast for next year is maintained at 4.8 percent.
“Although the recovery of Mongolia was uneven in terms of sector contributions, the economy’s near-term growth prospects remain robust,” said ADB Senior Country Economist for Mongolia Edward Faber. “Maintaining price stability, improving employment, and strengthening economic resilience through structural reforms are imperative to make growth more sustainable and inclusive.”
Economic expectation and visibility in Mongolia have improved since the beginning of this year, mainly due to reopening in the People’s Republic of China (PRC), subsequent recovery in exports, significant improvements in the current account balance, rebounding of foreign exchange reserves and lowered risks associated with the external debt repayment.
However, inflation remained high and above the central bank’s target for the past 27 consecutive months despite recent moderations. Inflation is likely to trend downward in the second half of 2023, though average inflation will remain high at 10.5 percent for this year before moderating to 8.6 percent for 2024, revised down slightly from the previous projections in April.
Downside risks to the outlook would arise from any decrease in the PRC’s demand for bulk commodities, a fall in coal and metals prices, new trade restrictions, disruption caused by exacerbated geopolitical tensions, negative spillover from tighter financing conditions, global uncertainty and slowdown, or capital flow reversal.