Libya Country Risk Report Q2 2020


Attention: There is an updated edition available for this report.

Libya Country Risk Report Q2 2020

International calls for a formal ceasefire in Libya are intensifying, but there is little to suggest the country's rival factions are prepared to end hostilities on the ground. International actors' commitment to non-interference in Libya at the January 19 Berlin summit also seems questionable; many still view the conflict as part of a wider regional power struggle, and continue to worry about losing influence on the ground vis-à-vis their rivals.

Around 75% of Libya's oil output has been taken offline as a result of militia blockades imposed on January 17, posing severe downside risks to the country's growth outlook. We have only made moderate revisions to our forecasts for now, though, as we see scope for the blockades to be lifted again over the coming weeks. We currently expect growth to come in at 2.7% in 2020, compared with 3.2% previously.

Meanwhile, we forecast Libya's fiscal balance to slip into a deficit of 3.4% of GDP in 2020, following two consecutive years of surpluses. Revenue growth from forex fees and oil exports looks set to slow sharply, while current spending continues to increase steadily.

Key Risks



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

We highlight major downside risks to oil output – and by extension, headline growth – should the ongoing conflict between western- and eastern-based authori-ties escalate further.

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.


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
Militias' Disruption Of Oil Exports Poses Severe Downside Risks To Libyan Growth
Fiscal Policy And Public Debt Outlook
Libya's Fiscal Deficit Slipping Back Into Deficit Amid Ongoing Conflict
10-Year Forecast
The Libyan Economy To 2029
Robust Long-Term Growth Outlook For Libya Masks Structural Weaknesses, Political Risks
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Libya Ceasefire At High Risk Of Breaking Down
Long-Term Political Outlook
Fragile Federalised State To Emerge
Global Macro Outlook
Economic Stabilisation Continues And Inflation Picking Up Slowly
TABLE: GLOBAL MACROECONOMIC FORECASTS (2019-2024)
TABLE: DEVELOPED MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: LIBYA – MACROECONOMIC DATA AND FORECASTS

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