Mongolia

The resource boom is weakening and downside risks to the outlook are rising. In 2023-24, record-high coal exports and robust household and government spending led to buoyant economic activity which, along with fiscal surpluses and successful external debt rollovers, helped reduce vulnerabilities. However, the highly expansionary fiscal policy, which, combined with the policy rate cuts in 2024, also fueled rapid credit growth despite tighter reserve requirements, a surge in imports, a widening current account deficit, and inflation above the Bank of Mongolia (BOM)’s target band. With coal exports declining in 2025H1, mainly due to falling prices and increased global uncertainty, the near-term outlook has become less favorable, and downside risks have increased amid limited policy buffers. The new government, formed in June 2025, has signaled its commitment to policy continuity.