Economic Outline

Economic Indicators

The Libyan economy is heavily reliant on the oil and gas sector and remains largely undiversified, with a dominant public sector. In 2023, oil and gas accounted for 60% of GDP, 94% of exports, and 97% of government revenues. While the private sector is underdeveloped, it holds considerable growth potential. Years of conflict and division have resulted in insufficient public investment and poor infrastructure maintenance, despite rising oil production. This, combined with a disruptive state presence in the economy, has hindered the development of the private sector. After growing by 10.2% in 2023, overall GDP shrunk by an estimated 10% in 2024 as oil GDP contracted by 15%. Non-oil GDP is projected to grow at an average of 1.3% during the forecast period, mainly driven by consumption. As oil production recovers in 2025 and 2026, GDP growth is expected to rebound to 12% in the medium term (data from World Bank).

Recently, Libya has been in a political dispute over the governance of the Central Bank of Libya (CBL). In August 2024, the Presidential Council decided to replace the Governor and renew the Board of Directors, but this was opposed by other political factions. Amid rising tensions, the UN Mission in Libya began mediating to find a peaceful resolution. Beyond its monetary policy role, the CBL is crucial to managing the country’s oil wealth and fiscal affairs. Oil revenues had been declining even before the CBL crisis, mainly due to lower energy prices. They totalled USD 10.5 billion in January-July 2024, down 5.4% from 2023. As a result, the fiscal surplus shrank from 4.6% to 1.7% of GDP between the first seven months of 2023 and 2024, while public spending rose by 9.7%, driven by higher wages and subsidies. With the decline in oil receipts and the easing of foreign currency constraints by the CBL, both fiscal and external balances were expected to worsen in 2024, with deficits of 5.7% and 21% of GDP, respectively. However, both balances are anticipated to improve in the medium term as oil production recovers (data from World Bank). The inflation rate in the Tripoli region averaged 1.9% in the first seven months of 2024, down from 2.7% during the same period in 2023, driven by lower food and housing prices. Based on official data, inflation in Tripoli is expected to remain controlled at 2.5% in 2025, assuming a prompt resolution of the CBL crisis, moderating global commodity prices, and Libya’s generous subsidy system.

Continued inflation and low oil production exacerbated poverty in a country already ravaged by civil war and repeated terrorist attacks. The Tripoli government has implemented an active policy of job creation, especially in the public sector but, according to the National Labor Force Survey 2022, the unemployment rate was estimated at 15.3%, with higher rates among women and youth at 18.4% and 23.1%, respectively. Access to basic services, such as water, is becoming increasingly difficult, particularly following the floods in Derna (2023) and Ghat and Tahala (2024), as well as the groundwater surge in Zliten.

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