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Over the past 30 years, Mongolia has transformed into a vibrant democracy, tripling its GDP per capita since 1991. The country made important progress in reducing poverty in the past decade, but macroeconomic volatility and slower growth have led to a stagnation in poverty reduction in recent years. Creating more and better jobs is a critical challenge for the country; labor market inclusion remains a challenge, especially for the younger population. These challenges were amplified by the COVID-19 pandemic, which took a heavy toll on household livelihoods and the economy despite substantial government support. With vast agricultural, livestock and mineral resources, and an educated population, Mongolia’s development prospects look promising in the medium- to long-term counting on the implementation of structural reforms.

The Mongolian economy is expected to grow by  5.1 percent in 2023 driven by the continued recovery in mining production and services, while agriculture production is anticipated to contract due to harsh winter/spring. From the demand side, dynamic exports resulting from the removal of border restrictions, and the commencement of the Oyu Tolgoi underground mining stage, a recovery in household consumption (on the back of increased pensions, social welfare, and wages), and large public investment (through the budget and quasi-fiscal activities) are expected to support growth. With the rapid recovery in domestic demand, exacerbated by more expansionary fiscal policy, inflation is expected to remain elevated throughout 2023. The medium-term outlook remains robust underpinned mostly by a substantial increase in mining output from the underground mining phase of Oyu Tolgoi. However, significant risks and challenges lie ahead, including a deterioration of external balances resulting from weaker external demand from China, more restrictive external credit conditions from further tightening of monetary policy in advanced economies, and persistent fiscal risks associated with sizable contingent liabilities.

Mongolia's national poverty headcount rate in 2020 was 27.8 percent, a marginal decrease in poverty from 2018 (0.6 percentage points). Following the economic crisis of 2016, the COVID-19 pandemic has further contributed to a deceleration in the pace of poverty reduction. Simulations indicate that had the COVID-19 pandemic not occurred, the poverty rate may have declined by an additional 3.5 percentage points in 2020. The wide array of COVID-19 relief packages, including top-ups of the Child Money Program (CMP), likely played a crucial role in preventing a rise in poverty between 2018 and 2020.

To ensure sustainable and inclusive growth and progress in poverty reduction, Mongolia will need to strengthen governance; build institutional capacity to manage public revenues efficiently; allocate its resources effectively among spending, investing, and saving; and ensure equal opportunities to all its citizens in urban and rural areas.

Last Updated: Oct 13, 2023


Mongolia: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments
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Ulaanbaatar, +(976) 7007 8200
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