Libya: Economic and Political Overview
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.
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 43.96 | 44.81 | 48.00 | 50.34 | 51.50 |
| GDP (Constant Prices, Annual % Change) | 10.2 | 2.4 | 13.7 | 4.1 | 2.0 |
| GDP per Capita (USD) | 6,422 | 6,482 | 6,874 | 7,138 | 7,230 |
| General Government Gross Debt (in % of GDP) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Inflation Rate (%) | 2.4 | 2.0 | 2.3 | 2.3 | 2.3 |
| Current Account (billions USD) | 6.40 | 4.96 | 5.99 | 5.45 | 5.68 |
| Current Account (in % of GDP) | 14.6 | 11.1 | 12.5 | 10.8 | 11.0 |
Source: IMF – World Economic Outlook Database, October 2021
Libya's 7.3 million population includes a workforce of 2.42 million. Agriculture's share in Libya's economy is negligible, accounting for 1.8% of GDP and employing 8.7% of the workforce (World Bank). Main products include wheat, barley, olives, dates, citrus, vegetables, peanuts, soybeans, and cattle. Arid climate conditions and the poor quality of the soil severely limit agricultural production. The primary limitation on agricultural production is the landscape, with only approximately 12% of the total 15.4 million hectares being arable. Cereal crops are grown in coastal regions, where rainfed production or cropping with supplemental irrigation is feasible, as well as in certain arid areas in the south, under complete irrigation. According to FAO, cereal production in 2024 was estimated at 164,000 tonnes, about 22% below average, due to poor rainfall, high temperatures in the northwest, and costly inputs; while cereal imports for 2024/25 are expected to exceed 3.2 million tonnes, with wheat imports forecast at 1.4 million tonnes—around 4% above average.
Industry is the backbone of the Libyan economy because of the strong petrochemical industry. It accounts for 77.3% of GDP, employing 23.2% of the active population (World Bank). Production includes petroleum, petrochemicals, aluminium, iron, steel, food processing, textiles, handicrafts, and cement, while manufacturing is underdeveloped (3% of GDP). Although the Libyan petrochemical industry, especially petroleum exports, were negatively impacted by the pandemic and the drop of oil prices, the sector showed signs of recovery in recent years: Libya's state-owned National Oil Corporation (NOC) announced that the country’s daily crude oil production surpassed the target set for 2024, reaching 1,405,609 barrels, along with 52,633 barrels of condensates.
Services account for 25.4% of GDP and its share in total employment stands at 68.1% (World Bank). Although this is the second-largest sector in Libya, significant industries, such as tourism and retail, are still underdeveloped. Financial services and transportation, however, account for a significant part of the service sector. According to the IMF, as of 2023, Libya's banking sector is described as rudimentary. The country hosts 20 banks, with their combined assets totaling around LYD 143 billion. Loans and credit facilities make up less than 15% of the total assets in the banking sector, while the majority, approximately 60%, consists of balances held at the Central Bank of Libya (CBL).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 8.7 | 23.2 | 68.1 |
| Value Added (in % of GDP) | 1.8 | 77.3 | 25.4 |
| Value Added (Annual % Change) | 6.8 | 17.8 | 1.2 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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Latest Update: May 2025
