Rising economic uncertainty now clouds Mongolia’s otherwise resilient economy. World Bank Country Manager for Mongolia Taehyun Lee presented the latest Mongolia Economic Update. Lee noted that Mongolia’s economy stays resilient but faces rising uncertainty. He explained that protecting macroeconomic stability and vulnerable households from potential prolonged external shocks remains a key priority. Diversifying the economy and boosting its competitiveness also rank high on the agenda.
Mongolia’s economy expanded by 6.9 percent in 2025 despite these challenges. A strong rebound in agriculture drove much of this growth. Solid mining performance, particularly copper production at Oyu Tolgoi, also contributed significantly. These growth drivers helped offset weaker coal activity during the year. Other sectors experienced mixed performance in 2025. Construction and manufacturing showed strong growth. However, trade and services moderated during the same period.
The World Bank projects Mongolia’s economy will grow at 5.0 percent in 2026. Mining and agricultural output will normalize following the strong 2025 performance. Senior Country Economist Jose Luis Diaz Sanchez provided additional insights. Strong export earnings and resilient household incomes kept consumer spending high, Sanchez noted. Combined with higher food and energy prices, these factors pushed inflation up from an average of 6.8 percent in 2024 to 8.6 percent in 2025. Over the medium term, growth should average approximately 5.5 percent in 2027 and 2028. Large infrastructure projects and sustained domestic demand will support this growth.
Country Economist Undral Batmunkh elaborated on the risks facing Mongolia. Risks to the outlook are tilted to the downside, Batmunkh stated. Globally, trade uncertainty and a prolonged Middle East conflict could weaken external demand. These factors could disrupt mineral exports and raise production costs. Consumer prices would likely increase as well. Domestically, stronger-than-expected fiscal spending could boost growth in the short term. However, such spending may widen external imbalances and increase inflation.
The report highlights the importance of strengthening economic resilience. Supporting diversification remains a critical priority for policymakers. Addressing persistent infrastructure gaps will enhance competitiveness. Advancing critical mineral development also offers significant opportunities. Efforts to strengthen disaster preparedness and climate resilience are equally important. The report’s special chapter examines firm and worker clustering in Ulaanbaatar.
Clustering raises productivity and creates economic opportunities for the capital. However, growing urban congestion may limit these productivity gains. This highlights the need to improve urban efficiency across the city. Promoting more balanced spatial development across the country would help address these challenges. The World Bank recommends these policy actions for sustained long-term growth.
