Page 14 - bneIntelliNews Small Stans & Mongolia Outlook 2025

Source: ADB, Asian Development Outlook
A booming mining sector, a second year of record high coal exports, almost entirely based on shipments to giant neighbour China, and strong household and government spending led to buoyant economic activity in Mongolia in 2024 despite a large contraction in agriculture due to the severe winter, including the loss of around 8mn head of livestock in freezing “dzud” conditions.
The IMF noted: “A critical priority for the new coalition government is to manage the current commodity boom prudently to effectively implement its ambitious reform and investment agenda.
“Building external and fiscal buffers will help create the necessary policy space to implement the ambitious investment program and other reforms in line with the economy’s absorptive capacity while maintaining external and internal balance. In the current situation, achieving these goals requires fiscal policy tightening, adherence to fiscal rules, tight monetary and macroprudential policies and enhanced financial supervision.”
Mongolia’s outlook is, as always, subject to downside risks stemming from commodity price volatility.
The IMF observed uncertainty related to Chinese demand for coal, disruptions in fuel imports from Russia and delays at China’s Tianjin port, a major transit point for Mongolia’s imports. Potential production and export delays in copper due to regulatory and procedural barriers pose risks, it also said.
And the IMF cautioned: “Natural disasters and geopolitical developments add uncertainty. On the upside, commodity prices or exports to China could be stronger than expected, especially in the near term. Moreover, new mining production could come onstream over the medium term, boosting exports.”
Mongolia by the end of 2024 looked on course for a trade surplus of around $14bn versus the substantially higher $22.5bn posted in the previous year, with the contraction partly due to higher imports driven by effects of stronger growth.
14 Small Stans & Mongolia 2023 www.intellinews.com