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Libya: Libya Outlook for 2013-17


The country (Libya)It has borders with Algeria for 982km, Egypt for 1115km, Niger for 354km, Sudan for 383km, Chad for 1055km and Tunisia for 459km.
It is situated in Northern Africa, bordering the Mediterranean Sea, between Egypt and Tunisia.
Land in Libya is mostly barren, flat to undulating plains, plateaus, depressions. Libyan land covers an area of 175 9540 km². The climate is Mediterranean along coast; dry, extreme desert interior. Libyan(s) speak Arabic, Italian, English, all are widely understood in the major cities.


Political instability will remain high owing to social unrest across the country, particularly in the long-neglected eastern region. Disagreement between liberal and conservative forces, namely the Muslim Brotherhood, has paralysed the coalition government and left it unable to confront the deteriorating security situation. A full parliamentary election is scheduled to take place a year next a new constitution has been approved in a referendum, but, given that a constitution is from presently on to be drafted, the original

schedule of October 2013 is presently highly unlikely to be met. Oil production has dipped in August on the back of armed blockades of pipelines and strikes by oil sector workers. The Economist Intelligence Unit expects real GDP increase to average 9% in 2013-17.

Political outlook

Security problems will persist at least into the initial half of 2014 as the government struggles to control the activities of militias that have proliferated in Libya next the 2011 civil war. Disagreements between liberal and Islamist political groupings have weakened the government\'s ability to enforce the policy of law and replace oil production to pre-crisis levels.

Economic policy outlook

An increase in the wages of national employees by 20% and annual bonuses were announced on September 4th. The government has maintained populist measures to placate public unrest. However, it may need to use some of its large foreign reserves in order to sustain high current spending in 2013, should oil output continue to dive sharply.

Economic forecast

Libyan oil output fell to its lowest level since the 2011 civil war at the end of July, owing to disruptions to the oil supply in the eastern and western regions. Official oil production figures suggest that output has fallen below 250,000 barrels/day in recent weeks.

Outlook for 2013-17

  • Political power has been transferred from appointed officials to elected representatives, but political uncertainty will remain high for much of the estimate period.
  • The transition will face delays owing to security issues, inclunding conflict over government-sanctioned militias and strikes by oil sector workers. Government failure to meet or manage public expectations may spark social unrest.
  • Economic policy in the post-Qadhafi era is expected to combine a heavy central-government role in reconstruction with market-oriented reforms.
  • The oil minister has suggested that new hydrocarbons legislation is imminent and that an oil-licensing round will be held before the end of 2013. However, security and other concerns suggest that the round is likely to be delayed.
  • Following a massive 92.1% rebound in 2012, the Libyan economy will grow by an annual average of 9% in 2013-17 on the back of increased activity in both the oil and non-oil sectors.
  • Inflation averaged 6.1% in 2012, and The Economist Intelligence Unit expects it to be maintained at an average of 4.8% over the estimate period by sustained private consumption and government spending.
  • We expect the current-account surplus to average 17.6% of GDP a year over the estimate period, although it will shrink sharply in the latter part of the period, to 8.8% of GDP in 2017, as oil prices drop.


  • The prime minister announced the launch of a national dialogue in August aimed mainly at addressing the constitution writing process and disarmament.
  • The trial of Saif al-Islam, the son of the former leader, Muammar al-Qadhafi, is due to take place on September 19th. However, tribal militias in Zintan insist on keeping the trial within Zintan, reflecting tense relations with the government.
  • In August unknown militias closed a pipeline linking two of the major oil‑fields in the west-Al Feel and Al Sharara-bringing down oil production to its lowest level since the 2011 civil war, and threatening fiscal stability in 2013/14.
  • The national-owned National Oil Corporation announced on August 18th that it was invoking force majeure on exports from four terminals that have been closed by protests since late July.
  • The government has been pushing in recent weeks for parliamentary legislation that would allow for the removal of food and fuel subsidies. These will be restored by a monthly direct cash transfer of US$102 per citizen.
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