Libya: Economic and Political Overview
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Libya's economy is almost entirely dependent on oil and gas exports. In 2022, the country continued to make significant progress towards institutional, political, economic, financial, and military reunification, which resulted in a strong rebound of oil and energy production, as well as an overall growth of the private sector. However, GDP registered an estimated negative growth of 18.5%. Nevertheless, the country's economy is expected to register positive growth in the coming years, with rates of 17.9% in 2023 and 8% in 2024.
Libyan oil and gas production accounts for nearly 60% of aggregate economic output and more than 90% of fiscal and export revenues. In 2022, oil activity in the country increased, and the government hopes to return to 2010 levels, when production reached its peak at 1.6 million bpd, within the next two or three years. With that, the country's oil-dependent economy is expected to grow. In 2022, the country's inflation rate increased to 5.5%, but it is expected to decrease to a more moderate rate in 2023, at around 4%, and 2024, when it is expected to reach 3%. Although Libya continued implementing economic policy responses to mitigate the impact of the COVID-19 pandemic, the country still faced a civil war and a divided government.
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 Ministry of Labor, unemployment rate reaches 20%, and about half of all young people and a quarter of women remain without employment.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
| GDP (billions USD) | 46.90 | 39.01 | 44.07 | 46.30 | 48.32 |
| GDP (Constant Prices, Annual % Change) | -29.5 | 28.3 | -12.8 | 17.5 | 8.4 |
| GDP per Capita (USD) | 7,059 | 5,813 | 6,502 | 6,764 | 6,989 |
| General Government Gross Debt (in % of GDP) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Inflation Rate (%) | 1.5 | 2.9 | 4.5 | 3.4 | 2.9 |
| Current Account (billions USD) | -3.97 | 2.86 | 1.17 | 5.57 | 6.68 |
| Current Account (in % of GDP) | -8.5 | 7.3 | 2.7 | 12.0 | 13.8 |
Source: IMF – World Economic Outlook Database, October 2021
Libya's 6.5 million population includes a work force of 2.5 million. Agriculture's share in Libya's economy is negligible, accounting for 4.1% of GDP and employing 16.4% 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.
Industry is the backbone of the Libyan economy because of the strong petrochemical industry. It accounts for 48.3% of GDP, employing 24.4% of the active population (World Bank). Production includes petroleum, petrochemicals, aluminium, iron, steel, food processing, textiles, handicrafts, and cement. Although the Libyan petrochemical industry, especially the country's petroleum exports, were negatively impacted by the pandemic and the drop of oil prices, the sector showed signs of recovery in 2022.
Services account for 55.8% of GDP and its share in total employment stands at 59.2% (World Bank). Although this is the second largest sector in Libya, significant industries, such as tourism and retail, are significantly underdeveloped. Financial services and transportation, however, account for a significant part of the service sector. Even though the impacts of the pandemic were felt through the service sector, it wasn't as significantly hit as industry.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 16.4 | 24.4 | 59.2 |
| Value Added (in % of GDP) | 4.1 | 48.3 | 55.8 |
| Value Added (Annual % Change) | 20.2 | -10.6 | -15.1 |
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: September 2023
