Mongolia's economic growth rate will gradually rebound through 2021 and accelerate in 2022 as the COVID-19 crisis impacts fade away and the global economic recovery strengthens, the Asian Development Bank (ADB) said in a report released on April 28.

The report, ADB Outlook 2021, forecast that Mongolia's economic growth will measure 4.8% in 2021, down from 5.3% in 2020, before rising to 5.7% in 2022, fuelled by domestic demand, investment, increased private credit and a recovery across economic sectors.

Mongolia's growth prospects in 2021 and 2022 will largely depend on the course of the COVID-19 pandemic, the rebounding of commodity exports, the overall investment climate and private sector credit growth, according to the ADB report.

The country should also focus on accelerating structural reforms, promoting investment, rebalancing fiscal and debt metrics, and strengthening financial stability to sustain growth, Pavit Ramachandran, ADB country director for Mongolia said.

Until the COVID-19 vaccination target of 60% of the population is achieved, concerns over public health will continue to dampen domestic demand and business confidence, resulting in an uneven recovery outside of the mining sector, the report noted.

Average inflation in Mongolia is expected by the ADB to accelerate to 6.9% in 2021 and 8.5% in 2022, rising above the 6.0% medium-term inflation target due to the expanding economy and recovery in demand, and increases in fuel prices, among other reasons.

The development bank warned that downside risks to the outlook were prolonged impacts from the pandemic on economic activity, slow implementation of the vaccination programme and any deterioration in the investment climate.