Mongolia’s economy is projected to grow by 6.2% in 2019, down from 6.9% in 2018, and slow further to 5.0% in 2020, the European Bank for Reconstruction and Development (EBRD) said in its latest economic outlook published on May 8.

The growth will be aided by further investment in the underground expansion of the Oyu Tolgoi gold and copper mine in the Gobi Desert, it added. Private consumption is also projected to support economic growth thanks to rising real incomes due, in part, to an increase in public workers' salaries. On the other hand, Mongolia’s downside risks stem from the possibility of a slowdown in China and the stalling of reforms due to political uncertainty in the run-up to the parliamentary elections scheduled for 2020.

“Mongolia’s growth accelerated significantly to 6.9% in 2018 from 5.3 per cent a year earlier. This was enabled by a continued surge in fixed investment and a rebound in private consumption,” the EBRD recapped. “The contribution of net exports was negative due to increasing mining-related imports, and the current account deficit widened to 15 per cent of GDP in 2018, from 10 per cent in 2017.”

“In the second half of 2018, the tugrik came under pressure, depreciating overall by 8 per cent in 2018. Average annual inflation accelerated to 6.8 per cent in 2018 from 4.3 per cent in 2017. In response to these developments the Bank of Mongolia tightened monetary policy by raising the policy rate from 10.0 per cent to 11.0 per cent in November 2018 and by restricting the growth of consumer lending through a ceiling on the household debt-to-income ratio,” the report added.