Country Economic Forecasts > Libya

Libya remains in crisis, with the two rival governments (in Tripoli and Tobruk) failing to agree on how to progress and Islamic State and other Islamic terrorist groups operating in much of the country. The conflict has had a huge impact on infrastructure, the effectiveness of state structures and oil exports. Lower oil output since the crisis erupted has been exacerbated by the plunge in world oil prices since H2 2014. Brent crude is now expected to average around US$54pb in 2015, down 46% from US$99pb in 2014. With oil revenues plummeting and ports and steel facilities hit, GDP is estimated to have fallen by 24% in 2014, the second year of steep contraction, and we now expect GDP to shrink by a further 5.9% in 2015. Modest growth of 2% is seen in 2016 and then about 7% a year in 2017-18, assuming a steady rise in oil output. But the risks remain heavily on the downside.Tumbling oil revenues have led to a sharply wider current account deficit of over 60% of GDP this year and falling reserves. And despite the assumed rise in oil output, a further 2% fall in oil prices in 2016 will mean another very large external deficit next year.