EBRD LOWERS MONGOLIA’S GROWTH FORECAST FOR 2025

The European Bank for Reconstruction and Development (EBRD) has revised its regional economic forecast for 2025 downward by 0.2 percentage points compared to its projections from February 2025. As indicated in the bank’s Regional Economic Prospects report released just recently, the economies in which the EBRD invests are now anticipated to grow at an average rate of 3.0 percent this year, with a gradual recovery to 3.4 percent expected in 2026.

This adjustment follows a previous reduction of 0.3 percentage points in February and is attributed to a combination of global challenges, as highlighted in the report titled “Uncertain Times”.

The report indicates a troubling reversal in inflation across the EBRD regions. The current inflationary pressures are primarily driven by demand, which is a result of lax fiscal policies and significant nominal wage increases. Despite increasing fiscal challenges, the average debt level in the EBRD regions is projected to remain relatively stable at approximately 52 percent of GDP over the next four years.

This stability is contingent upon the implementation of rigorous fiscal measures by governments, which may include reductions in certain expenditure areas in light of anticipated increases in spending on defense, industrial policies, and interest obligations.

Furthermore, the report cautions that increasing dependence on bond issuances in the EBRD regions, rather than concessional borrowing, could heighten the vulnerability of lower-income economies to market fluctuations and policy uncertainties. In Central Asia, growth is projected to slightly decrease from 5.6 percent in 2024 to 5.5 percent in 2025, and further to 5.2 percent in 2026. The decline in commodity prices has led to downward adjustments for Kazakhstan and Mongolia, with the EBRD lowering Mongolia’s growth forecast for 2025 by 0.4 percentage points to 6.3 percent.

Resource: ebrd.com