Mongolia’s economy shrunk by 3.8 percent in the first quarter of 2022 and this year's growth is expected to be just one percent. But international institutions anticipate the economy to speed up by at least six percent in 2023 from expanded commodity exports. The country grew 1.4 percent in 2021 following a 5 percent dip in the pandemic year of 2020.
In part, the slump is due to the COVID border restrictions by Beijing that are affecting coal and copper exports.
Due to this situation, Prime Minister Oyun-Erdene and his top cabinet ministers visited southern provinces to see the progress of upgrading and integrating border infrastructure with China, which is key expand commodity exports.
For now, coal miners remain cautious about their sales this year.
The economic downturn also coincides with growing food shortages echoing the food crisis in many other countries. The government announced a tax exemption for imports of rice, sugar and vegetable oil until the end of this year.
Vietnam and China make the lion's share (~$20 million annually) of rice imports to the country while Malaysia and Indonesia are top suppliers of cooking oil to Mongolia, the demand of which usually spikes preceding Tsagaan Sar (Lunar New Year) celebrations.
To further prevent potential food shortages the president called to pass a five-year plan on sponsoring the agri-food sector with MNT 1.7 trillion ($570 million). The agriculture ministry estimates MNT 500 billion ($167 million) will be immediately needed to address the food production and supply disruptions urgently.
Mongolia is in shortage of grains and sugar as Russia temporarily banned its export.
Crop growers also are planning to increase their harvest this year by increasing their seeding by 24.7 percent. The agriculture ministry is working closely with farmers to provide necessary fertilizers.
As a result of the lifting of pandemic restrictions earlier this year, the hospitality and tourism sectors has seen a strong recovery despite the economic hardships.
Hotels recorded a 90 percent jump in their revenues from almost zero stays during the pandemic time.
The tour operators in Mongolia expect 245,000 tourists this summer from South Korea following visa-free travel.
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