Libya’s Economic Outlook - October 2016

A new report from the World Bank says the Libyan economy is near collapse as political stalemate and civil conflict prevent it from fully exploiting its sole natural resource: oil.

With oil production just a fifth of potential, revenues have plummeted, pushing fiscal and current account deficits to record highs.

With the dinar rapidly losing value, inflation has accelerated, further eroding real incomes. In addition to near-term challenges of macroeconomic and social/political stability, medium-term challenges include rebuilding infrastructure and economic diversification for job creation and inclusive growth.

Outlook

The outlook hinges on the assumption that the Libya’s House of Representatives will endorse a new government of national accord by the end of 2016, which will be able to start restoring security and launching programs to rebuild the economic and social infrastructures, especially oil facilities and terminals.

In the baseline scenario, production of oil is projected to progressively improve to around 0.6 million bpd by end-2017. On this basis, GDP is projected to increase 28%. However, the twin deficits will remain as revenues from oil and will not be sufficient to cover budget expenditures and consumption-driven imports.

This should keep the budget deficit at about 35% of GDP and the current account deficit at 28% of GDP in 2017. However, downside risks to this scenario remain high as the political uncertainties may prevail.

Over the medium term, it is expected that oil production will progressively increase without reaching full capacity before 2020 due to the time necessary to restore the heavily damaged oil infrastructure.

In this context, growth is projected to rebound at around 23% in 2018. Both the fiscal and current account balances will significantly improve, with the budget and the balance of payments running surpluses expected from 2020 onwards. Foreign reserves will average around US$26 billion during 2017-2019, representing the equivalent of 13 months of imports.

Unless immediate and target action is taken to address the humanitarian crisis, the situation is unlikely to improve. The situation in Libya is such that simply relying on a slightly improved macro outlook is unlikely to bring about significant change.

The country needs humanitarian aid and specific programs to address the destruction and lack of basic services that a large part of the population faces.

Full report here.

(Source: World Bank)

One Response to Libya’s Economic Outlook - October 2016

  1. YouMosbah 12th October 2016 at 9:45 am #

    We Libyans know very well that France, USA, UK. Italy and all other countries who involved in 2011 war over Libya are fully responsible of what happened to Libya and the Libyans.
    The world bank and who ever know very well about the Libyan money sandwiched by all these countries and their companies and banks. UN is the one main responsible of all the disaster in Libya however has no power to speak up the truth!!!?
    Billions of dollars are stolen and now the Libyans are suffering of economical claps and down fall?\
    Libya was lending country before 2011 and now you are talking about giving charities to the Libyan people????? Why do not you stop all the games and let new cooperation and relations with the Libyans before it is too late. I would suggest that urgent action must be taken to release the Libyan money under sanction to be used for health care, education, rehabilitation of civilian organizations and establishments such as airports, roads, schools, universities, hospitals and supply of foods and human needs.These urgent actions should be away from political conflicts and should be under highly responsible authorities hired by UN and civilian community including Libyans.
    At the same time oil industry should be supported by all means to keep the flow of hard currency to the Libyan banks. All Libyan people are having the right to recover and to stand up again for good life. The inertial affairs must be kept for only Libyans and all other world agendas must be kept silent and away because these agendas are the main cause for the problems in Libya. The Libyan youths are in need for new relations and business integration and they will make it up real if the world powers stop their ideas of influence and aggression. We want human relations between us and all other parts of the world without any intervention and with respect and dignity to all people.
    It is well known that economical affairs are functions of all other aspects in any society and the worst situation for the people is to have them like mouses in scrambled sacks. Why is that going on in Libya not in Europe or USA? Our children are going under high pressure without schools and health care and you people taking about democracy .. where is it? We fully believe on it but remember that Europe now was under two world worse and over 50 million people were killed and finally people relied that was crazy and disaster and stranded up to rebuild Europe .. the same happens in USA during the civilian war between north and south!!. That is history but people always stand up and do the right thing if they given the chance. Give the Libyans the chance and see the future ... they will make it soon>
    Good Luck

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