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Libya Country Risk Report Q1 2019

Libya Country Risk Report Q1 2019

We expect deep political fragmentation to persist in Libya in the near term as rival eastern and western factions remain unwilling to compromise in negotiations over power-sharing This will keep security risks elevated as militias compete for influence, territory and state resource control on the ground in the absence of a strong, unified political authority Amid these circumstances, we maintain our view that general elections will be delayed – at least until 2019

We forecast the Libyan economy to grow by 11 2% in 2018 and 7 9% in 2019, primarily on the back of oil production gains Consumption looks set to remain depressed as continued political instability and persistently high inflation constrain business activity and weigh on households' purchasing power Structural obstacles, such as underdeveloped infrastructure, will keep growth far below potential for many years – even beyond an eventual resolution to the ongoing political conflict

Meanwhile, oil production and price gains will boost Libyan fiscal revenues That said, the fiscal deficit will narrow only gradually as political instability and wide-spread social discontent discourages fiscal consolidation, keeping current spending high Persistent deficits will primarily be funded through domestic borrowing, causing already-high public debt levels to increase further

Key Risks

Libya's combination of oil wealth, tribal divisions, weak-to-non-existent institutions and security vacuum portends to significant instability and potential for a return to full-blown civil war over the coming years

A failure to create sufficient employment opportunities within the non-oil economy poses a clear risk to social stability, given Libya's burgeoning youth population Libya Country Risk Q1 2019


Executive Summary
Core Views
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Oil Production Gains To Fuel Economic Growth
Fiscal Policy And Public Debt Outlook
Fiscal Deficit To Narrow On Oil Gains
10-Year Forecast
The Libyan Economy To 2027
Protracted Crisis As Political Instability Is Elevated
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Political Divisions, Security Risks To Delay Elections
Long-Term Political Outlook
Fragile Federalised State To Emerge
Global Macro Outlook
Inflation And Policy Risks Rising
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS, REAL GDP GROWTH, % Y-O-Y
Libya Country Risk Q1 2019THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.ContentsIndex Tables
TABLE: LIBYA – MACROECONOMIC DATA & FORECASTS

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