Washington, DC: World Bank
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Abstract
Mongolia’s economy has transformed from being primarily agriculture-based to one driven by mining, which is now the principal source of economic growth, fiscal revenue, and exports. Between 2015 and 2024, economic growth averaged 3.8 percent, largely fueled by mineral extraction, and the expansion of the mining sector contributed significantly to Mongolia’s transition to upper-middle-income status in 2024. However, the economy’s heavy dependence on mining has increased vulnerability to commodity price fluctuations, external demand shocks, and trade disruptions, resulting in recurring boom-and-bust cycles. This Country Private Sector Diagnostic (CPSD) identifies a focused set of reforms aimed at accelerating medium-term growth and job creation, particularly through improvements in mineral exploration and renewable energy that support the government’s vision of developing integrated industrial clusters linking mining, mineral processing, renewable energy generation, metallurgy, and high-technology industries. The report is especially relevant to Mongolia, where substantial opportunities exist beyond traditional mining, including solar and wind energy, proximity to major mineral markets, and a globally recognized cashmere industry, yet sustained private investment remains limited. The CPSD serves as a practical tool to help sequence reforms, align public initiatives with private investment decisions, and translate high-level objectives such as economic diversification and green growth into actionable policy measures. By focusing on key sector-specific constraints and recommending measures to reduce risks, improve returns, and expand market opportunities, the report aims to strengthen engagement with domestic and international investors. It also provides guidance for public investments, regulatory reforms, and instruments to mobilize private capital, including guarantees, blended finance, and public-private partnerships. Ultimately, the CPSD seeks to convert investment opportunities into implementable actions that can stimulate private investment, create jobs, and support a more diversified and resilient growth model for Mongolia.
