São Paulo – Libya’s economy is estimated to have grown 1.9% last year, following a 10.2% increase the year before, and is expected to expand by 16.1% in 2025, remaining closely tied to the performance of the sector that dominates revenue generation in this North African Arab country—oil. The projections are included in a report by the Executive Board of the International Monetary Fund (IMF) released on Wednesday (25).
According to the Fund, last year’s slowdown in real gross domestic product growth is linked to a contraction in the hydrocarbons sector, and this trend is expected to continue. “The outlook continues to be dominated by developments in the oil sector,” the report says, further emphasizing that the recovery in growth expected for 2025 will also be driven by oil production—in this case, its expansion.
In the medium term, Libya’s economic growth is expected to stabilize around 2%, according to the IMF. In 2026, the projected real GDP growth is 4.4%, falling to 1.6% in 2027, then reaching 1.7% in 2028, 1.9% in 2029, and 2.2% in 2030. “Non-hydrocarbon growth is set to remain between 5 and 6 percent in the medium term, supported by sustained government spending,” the Fund says. In recent years, public spending has also supported the expansion of the country’s non-oil sector.
The IMF forecasts a small current account surplus for Libya this year, amounting to 0.7% of GDP. The current account records a country’s economic transactions with the rest of the world. In the medium term, a small current account deficit is expected. Meanwhile, the fiscal balance is projected to remain in deficit due to continued high levels of public spending. The fiscal balance reflects the difference between government revenues and expenditures.
The report also highlights the downside risks facing Libya’s economy. Domestic risks stem from political instability, which could escalate into active conflict, disrupting oil production and exports and halting progress on much-needed economic reforms. The IMF also notes that Libya’s economy is exposed to global downside risks due to the country’s heavy reliance on oil exports and its high volume of imports.
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Translated by Guilherme Miranda
