Happy New Year to all our dear Inside Mongolia readers! As our final wrap-up of the year, we’re bringing you an A-to-Z overview of Mongolia’s economy in 2024.
📃 Brief and Clear
Mongolia’s economy grows by 5% in 2022 and 7.4% in 2023, with a 5% increase in the third quarter of this year. This growth is driven by a 25% rise in the physical volume of mining raw materials, particularly coal exports. The related sectors expand, and economic activity picks up from the second half of the year. Household consumption also increases due to wage and pension hikes, and government spending grows significantly, further boosting economic activity.
To further stimulate the economy, the Bank of Mongolia lowers its policy interest rate to 10%, aiming to support medium-term growth, encourage lending, and increase consumption. This move leads to a 33.4% rise in lending, totaling ₮8.7 trillion compared to last year.
🔢 2024 GDP Figures
Here are a few key numbers reflecting this year’s economic outlook,
🇨🇳🇷🇺 Neighborhood Relations: Dependence
This year marks a notable expansion in Mongolia’s foreign relations, highlighted by visits from the Presidents of 12 countries and 1 international organization. However, despite these diplomatic advances, Mongolia’s trade dependency on its two largest neighbors, China and Russia, continues to deepen. As of November, 91.2% of total exports flow to China, while 64% of imports originate from China and Russia.
This reliance underscores the urgent need for economic diversification. At present, coal accounts for the majority of exports to China, while nearly all exports to Switzerland consist of gold. Broadening Mongolia’s export base to include value-added products and reaching more markets will be key to strengthening the structure and competitiveness of its foreign trade.
✨ A Special Year
Mongolia’s budget has been in deficit every year except 2018. Although next year’s budget initially includes a deficit, the President vetoes it, leading to a revised balanced budget with a 3.5% GDP surplus.
One noteworthy aspect of the revised budget is the allocation of cuts. Although the budget is reduced by ₮2.3 trillion, the areas and items targeted for these cuts raise some questions. For instance, while significant reductions include limiting the recruitment of new civil servants, items such as a cheese factory and other seemingly less critical expenditures remain intact.
While the approval of a deficit-free budget is commendable, ensuring its effective implementation and performance will be essential for achieving its intended outcomes.
💰 External Debt: $36 Billion
As of Q3, Mongolia’s total external debt rises by 7.2% year-on-year to $35.6 billion. Savings institutions’ external debt shows the highest increase, at 23.1%.
The government repays major bonds, such as Gerege, Samurai, and Chinggis, issuing new ones to cover $800 million and $600 million repayments. This genius strategy leaves us with 3 delightful bonds maturing between 2026 and 2029, racking up a princely $1.6 billion in principal payments. Oh, and let’s not forget the average 7.2% interest rate. The real challenge, however, lies in the Government's impeccable ability to spend and control these funds. Fingers crossed, right?
📈 Looking Ahead: 7.2% Growth in 2025
In 2025, the Mongolian economy is expected to grow by 2 percentage points more than in 2024—a bright forecast of 7.2% average growth, according to influential organizations. The Ministry of Finance leads the optimism with an 8% prediction, while the ADB takes a more cautious stance at 6%. Somewhere in between, we cross our fingers for the sweet spot.
Finally, it wouldn’t be a new year without a fresh lineup of challenges. Energy and fuel supply issues? Check. Falling commodity prices? Naturally. Rising import costs? Why not! These hurdles remind us that sustainable growth isn’t a given—it requires real effort. Long-term solutions, such as investing in infrastructure, diversifying production, and rebalancing foreign trade, are essential. Because, let’s be honest, relying on luck alone isn’t a growth strategy.
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