2024-05-26-世界银行-蒙古经济更新_2024年5月（英）_26页_713kb

Mongolia Economic Update Summary

Core Content

This report provides an overview of Mongolia's economic developments in 2023, the outlook for 2024, and medium-term projections up to 2026. It highlights the key drivers of growth, inflation trends, fiscal performance, and the impact of external and internal factors on the economy.

Main Points

1. Recent Economic Developments

• Growth in 2023:
  Mongolia's economy grew by 7.1% in 2023, driven by mineral production and private consumption.

  • Mining was the main contributor, with coal and copper production surging.
  • Coal exports increased by 91% compared to pre-pandemic levels (2018-2019), largely due to higher demand from China.
  • Transportation services also supported growth, contributing over 60% of GDP growth.
  • Agriculture faced a severe contraction due to the dzud (extreme cold and heavy snowfall), with production falling 8.9% in 2023, the largest since 2010.
  • Private consumption accelerated in the second half of 2023, supported by higher wages and declining inflation.

• Inflation Trends:

  • Headline inflation gradually declined from 12.3% in January 2023 to 7.0% in March 2024, falling within the BOM's target range of 4.0-8.0%.
  • Import prices moderated due to stabilized international food and fuel prices, reduced transportation costs, and nominal exchange rate appreciation.
  • Domestic food prices, particularly meat, remained elevated throughout 2023 due to supply constraints and high production costs.

• Fiscal Performance:

  • Fiscal revenues increased by 31.3% y-o-y, driven mainly by mineral export earnings, royalties, CIT, and dividends from mining SOEs.
  • Fiscal spending rose by 23.7% y-o-y, but as a share of GDP, it declined to 31.9%.
  • Budget surplus reached 2.6% of GDP, contributing to a reduction in public debt from 62.1% of GDP in 2022 to 44.1% of GDP by end-2023.
  • Public debt is expected to continue declining in 2024, with a projected 43.8% of GDP.

• External Position:

  • Coal exports led to a current account surplus of 0.7% of GDP in 2023.
  • Gross international reserves increased to US$4.9 billion by end-2023, up from US$2.7 billion in August 2022.
  • FDI inflows slowed in 2023 due to reduced investment in key copper mines and global financial uncertainties.

2. Outlook, Risks, and Challenges

• Growth in 2024:

  • Economic growth is expected to slow to 4.8% as coal exports normalize and agricultural contraction continues due to the dzud.
  • Mining is projected to expand, but at a slower pace than in 2023, as copper and gold production increases.
  • Private consumption and fiscal expansion (including higher public wages, pensions, and social welfare) are expected to support growth.

• Inflation in 2024:

  • Headline inflation is projected to rise to 8.5%, slightly exceeding the BOM's target range.
  • Domestic food prices are expected to remain high due to agricultural contraction and supply bottlenecks.

• Fiscal and Current Account Deficits:

  • Fiscal deficits and current account imbalances are likely to reemerge in 2024 as coal prices decline, export volumes normalize, and government spending remains elevated.

• Medium-Term Outlook (2025-2026):

  • Economic growth is expected to average 6.4%, driven by a substantial increase in mineral production from the Oyu Tolgoi (OT) mine, which is projected to more than double its 2023 production by 2025.
  • Non-mining sectors are expected to grow, though private investment remains subdued due to high lending rates.

• Risks:

  • Weaker Chinese economic growth, particularly due to a slowing real estate market, could reduce steel demand and, in turn, coal demand.
  • Escalating geopolitical tensions may lead to higher oil prices, increasing import costs.
  • A more severe dzud could worsen agricultural contraction, while unexpected fiscal expansion may lead to wider deficits and higher inflation.

• Structural Challenges:

  • The economy remains vulnerable to commodity price volatility.
  • Natural disasters (e.g., dzud, floods) are increasing in frequency and intensity, requiring institutional and policy reforms to enhance climate resilience.
  • Structural reforms are essential to decouple the economy from the commodity boom-bust cycle and to achieve Vision 2050 goals.

Key Information

• 2023 Growth Drivers:

  • Coal exports (up 91% y-o-y) and mining output (up 23.4% y-o-y).
  • Private consumption (up 7.4% y-o-y) and public consumption (up 5.4% y-o-y).

• 2023 Inflation:

  • Headline inflation fell to 7.0% in March 2024.
  • Domestic food inflation averaged 18.9% in 2023, but declined to 12.1% in March 2024.

• Fiscal Performance:

  • Budget surplus reached 2.6% of GDP in 2023.
  • Public debt fell to 44.1% of GDP by end-2023.

• External Position:

  • Current account surplus of 0.7% of GDP in 2023.
  • International reserves reached US$4.9 billion by end-2023.

• 2024 Projections:

  • Real GDP growth: 4.8%.
  • Headline inflation: 8.5%.
  • Current account balance: -11.5% of GDP.
  • Fiscal balance: -1.0% of GDP.

• 2025-2026 Projections:

  • Real GDP growth: 6.4% on average.
  • Oyu Tolgoi production: Expected to more than double by 2025.

Conclusion

While Mongolia's economy showed resilience in 2023, driven by coal exports and fiscal adjustments, the growth momentum is expected to slow in 2024. The dzud continues to strain the agricultural sector, and inflationary pressures are likely to rise. Structural reforms and diversification are crucial to sustaining long-term growth and reducing vulnerability to external shocks.