Country Report Libya October 2017

Country Report Libya October 2017

  • October 2017 •
  • Report ID: 325881

Outlook for 2018-22



  • Although Libya remains unstable, with threats from jihadis and militias, a shaky ceasefire deal is now in place between the Tripoli-based Government of National Accord and Khalifa Haftar, the warlord who backs its eastern rival.
  • A new UN-led initiative to form a unity government and then move towards elections is expected to be successful, although it is likely to face delays and there are significant downside risks given the failures of previous initiatives.
  • Economic policy will be hindered by lax security and financing constraints, owing to high current spending obligations and low oil revenue. However, post-war development will start in the later years of the forecast period.
  • The rebound in oil exports in 2017 will have returned the economy to 23% real growth. However, growth will slow to about 5% in 2018-19, owing to pent-up import demand, before rising again from 2020.
  • Consumer price inflation will peak at around 34% in 2018, largely because of supply-chain disruptions. However, it will fall thereafter as a result of improving security and an easing of currency pressures.
  • We forecast that the current-account deficit will average around 3% of GDP in 2018-22, far below the peak level, estimated at around 21% of GDP in 2016.


Review



  • The UN launched a new peace process to revise the Libyan Political Agreement, form a unity government and move to a constitutional referendum and elections.
  • In the first stage, the rival parliaments agreed to reduce the size of the Presidential Council from nine to three members, and to a process for appointing them.
  • The initiative followed a setback in the process of moving to a constitutional referendum after a court in Bayda ruled that the constitutional drafting assembly's approval vote in July was invalid on procedural ground.
  • Islamic State forces have regrouped in parts of Sirte district, after being ousted from the city in 2016, as ongoing instability gives the jihadists space to operate. In response, the US launched its first airstrikes under the Trump Administration.
  • Production at Al Sharara, Libya's largest oil field, has continued to face disruptions from militias seeking to secure concessions from the government.
  • GECOL, the state-owned electricity company, has signed a deal to build a new 740-MW gas-fuelled power station in Tobruq, utilising turbines from GE.


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Country=Libya Date=201710 Topic=Supply Publisher=TheEconomistIntelligenceUnit Price=1000