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By Libya Herald reporter.
Malta, 14 January 2015:
An economic report has forecast that real GDP growth in Libya could rise to 10.8 percent in . . .[restrict]2015 and as high as 21.9 percent in 2016, after it had contracted by 18 percent in 2014.
The forecast is made on the assumption that an agreement is reached among Libya’s warring political factions, enabling the full resumption of oil exports. Libya’s warring factions are scheduled to meet in Geneva under the auspices of UNSMIL.
The economic report by the Oxford Economics Foundation, published by the official Libyan News Agency LANA yesterday, said that the pace of growth of the Libyan economy is affected by several factors, including the costs of reconstruction, and that oil revenues are still expected to fund the reconstruction of oil production and transportation infrastructure, and new long-overdue investments in the oil and gas sectors.
It noted that world crude oil prices fell sharply; well below the estimates used to plan Libya’s budget and that spending estimates in the budget would raise the deficit by 2014. The report added that Libya had no plan to prepare a budget in 2015, in light of the political chaos.
The report went on to say that it saw no room for spending cuts in the Libyan budget, where two-thirds of budget spending was on public sector salaries and subsidies.
In fact, in reality, last week the authorities in Tripoli announced plans to slash spending by removing subsidies on fuel and electricity, stopping the payment of the family bonus, suspending planned salary increases and the payment of any benefits to government officials, and enforcing the use of national IDs in paying government salaries.
Although the Tripoli authorities have since backtracked on cutting any salaries, it is believed that both Libyan factions understand that major cuts have to be made in view of the equally huge fall in oil revenues.
The economic report said that Libya’s foreign exchange reserves (accumulated under the Qaddafi regime) fell from nearly 130 billion dollars at the end of 2013 to nearly 90 billion dollars in September 2014.
The report also predicted the declining value of exports of goods to US$ 15.8 billion in 2015, from US$ 19.5 billion in 2014 and US$ 46 billion in 2013. With regards to export services, the report expected these to remain at US$ 200 million in 2015 as they were in 2014 and 2013.
Imports of goods were forecast to rise to US$ 29.2 billion this year up from US$ 25.8 billion last year and rise to US$ 33.4 billion dollars next year. Services imports are expected to rise to US$ 7 billion this year, up from US$ 6.6 billion last year. Meanwhile, exported goods are expected to decline by 19 percent in 2015, and merchandise imports to grow by 13.3 percent this year, compared to a decline of 24.3 percent in the past year.
| Current Account deficit | Deficit as a percentage of GDP | Nominal GDP | GDP per capita | Inflation percent | |
| 2013 | – | – | US$ 84.4 bn | – | – |
| 2014 | US$ 15.2 bn | 28.3 | US$ 70 bn | US$ 11,237 | 2 |
| 2015 | US$ 22.5 bn | 21.5 | US$ 79.5 bn | US$ 12,578 | 12 |
| 2016 | US$ 14.5 bn | 14.2 | US$ 102.1 bn | US$ 15,936 | – |
Source: Oxford Economic Foundation
The current account deficit as a percentage of GDP is expected to be 28.3 percent in 2015 compared to 21.5 percent in the 2014, decreasing to 14.2 per cent in 2016.
The report also predicted a rise in the value of nominal GDP to US$ 79.5 billion in 2015, from US$ 70 billion last year and US$ 84.4 billion in 2013, rising to US$ 102.1 billion in 2016.
The report also predicted that GDP per capita at current prices to rise to US$ 12,578 dollars in 2015, up from US$ 11,237 last year and it is expected to rise to US$ 15,936 next year. Inflation is expected rise to 12 percent in 2015, up from 2 percent last year, the report concluded. [/restrict]
