Following four years of recession, the Libyan economy grew strongly in 2017, driven by a welcome recovery in oil production. However, sustaining this dynamic to reach economic potential depends on the resolve of the political strife.
According to the World Bank, Libya’s GDP jumped to about $50,980 billion by the end of 2017 compared to $32.2 billion in 2016, an increase of $18.7 billion. It was the third highest GDP in Libya since 2012.
GDP is estimated to have increased by almost 27% in 2017 allowing income per capita to substantially improve to 63 percent of its 2010 level after losing more than half of its value.
In 2015, Libya’s GDP recorded $29.2 billion, while it reached $41.1 billion in 2014, $65.5 billion in 2013, and $81.1 billion in 2012.
The oil sector more than doubled its production to an average 0.820 million barrels per day (bpd) in 2017, compared to only 0.380 million in 2016. The non-hydrocarbon sectors remained sluggish inhibited by lack of liquidity and security.
Moreover, Libya’s budget revenues almost tripled in 2017 (31.8% of GDP) compared to 2016, but remained at half of potential.
However, inflation hit a record level of 28.4% in 2017 following the 25.9% in 2016. High inflation coupled with weak basic service delivery is likely to have increased poverty and exacerbated socioeconomic exclusion.
Also, inefficient subsidies (9.2% of GDP) continued to absorb a significant amount of budget resources while capital expenditures remained weak (4.8% of GDP). Consequently, a high budget deficit persisted at 26% of GDP in 2017 (63.1% of GDP in 2016). The deficit is being financed mainly through cash advances from the Central Bank of Libya. The domestic debt has quickly increased to reach LYD 59 billion end September 2017, up from LYD 1 billion in 2010.
The relative economic improvement in 2017 remains fragile, as sustaining this dynamic depends crucially on a political resolution that in the current context seems hard to reach.