- Mongolia Facing a Crunch parliamentary vote on Monday, which could lead to the fall in the government coalition
- The new analysis of Mongolia Economic Development Board indicates that this could lead to a sharp drop in national income and foreign direct investment (IDE), as well as spiral inflation
- Political instability will endanger the economic progress made in recent years
ULAAN-BABAATAR, Mongolia,, June 1, 2025 / Prnewswire / – like Mongolia Parliament is preparing to vote on Monday on the question of whether the country’s coalition government should remain in office, a new economic analysis warns that the disappearance of the government could see the size of Mongolia The economy contracts by more than 20% within six months and the FDI drops by almost 40% in annual shift.
Prime Minister Oyun-Erdene called on members of the great Khural State on Wednesday to decide whether the coalition government, which has been in place since the legislative elections last June, should remain a way to end recent political instability. The Prime Minister must address Khurale on Monday before a “vote of trust” – probably considered to be one of the most important moments Mongolia Political history since become a democracy in the early 1990s.
As voting, new economic data – which can be consulted in full here – Product by Mongolia Economic Development Committee warns against the scale of the economic blow Mongolia could face, namely:
- A 22% reduction in gross national income within six months
- An increase of 12.2% of inflation in a year
- Unemployment in annual slipping going to 2.5%
- Mongoli Tugrik depreciating against the US dollar of 17.9% by the end of 2025
- A drop of 18 points in annual shift in Mongolia Political stability index
These forecasts comply with the experiences of other countries where political instability has had a negative impact on the economy, including after the fall of a coalition government:
- According to the World Bank data and other key sources, the rupture of the coalition in Estonia brought the FDI to 7.54% in 2021, to 0.74% in 2024, and its economic growth was 7.3% in 2021 to -0.9% in 2024
- An international study analyzing the data up to 169 countries between 1960 and 2004, concluded that high levels of political instability are associated with lower GDP growth, in particular due to the drop in productivity growth and reduced accumulation of physical and human capital
Commentary, Dr. Batnasan B., professor at the business school of the National university of Mongolia and member of the Economic Development Council, said:
“”The latest data clearly highlights the potential economic consequences of a collapse Mongolia Coalition government: net economic slowdown, manure inflation and an increase in unemployment.
“It is completely appropriate that elected representatives decide who governs the country. But it is just as important that such decisions are made with full access to facts and a clear understanding of potential risks.
“The analysis of the Economic Development Council – combined with lessons from other countries that have been faced with similar circumstances – prepares a convincing warning: all hardly won economic progress Mongolia has achieved in recent years could be compromised if Monday’s vote leads to increased political instability. “”
This new analysis, as well as previous worlds Mongolia has done since the COVID-19 pandemic, including the addition 9 billion USD to its economy and increase GDP per capita by a $ 2,400.
Notes
Economic Development Council of Mongolia:: https://www.facebook.com/profile.php?id=61574363563476
Complete economic analysis available here: https://nrpa.gov.mn/mn/zasgiyn-gazryn-togtvorguy-baydal
Source of the Government of Mongolia
