Libya's economy showed signs of recovery in 2024, despite challenges related to its reliance on hydrocarbons and ongoing political instability. The World Bank's latest Economic Monitor for Libya reported a 0.6 percent contraction in the economy, primarily due to a 6 percent decline in oil GDP influenced by disruptions from the Central Bank of Libya crisis in August. However, non-oil GDP grew by 7.5 percent, driven by strong private and public consumption.
The report highlights the need for structural reforms to boost non-oil sectors and reduce hydrocarbon volatility while addressing political instability and improving governance.
In 2025, Libya's economy is expected to rebound with an expansion of oil sector activities. Oil production is projected to average 1.3 million barrels per day, marking a 17.4 percent increase from 2024. Consequently, GDP is anticipated to grow by 12.3 percent, with non-oil GDP growth expected around 5.7 percent but slowing to 4 percent in the medium term.
The outlook remains uncertain, although increased political stability could benefit the Libyan economy and population significantly. Energy prices will depend on global growth prospects and future OPEC+ production levels.
"Libya is on a path of economic improvement," said Ahmadou Moustapha Ndiaye, Division Director for the Maghreb and Malta at the World Bank. "Achieving political consensus on transparent management of the country's oil wealth would significantly contribute to further stabilizing the country."
The Libya Economic Monitor includes a chapter titled "Redefining the Role of State-Owned Enterprises in Libya," which examines nearly 190 state-owned enterprises (SOEs) across strategic sectors like oil, finance, and utilities. The analysis highlights fiscal challenges associated with SOEs that impact fiscal sustainability and private sector growth.
International experience suggests that reforms such as enhancing state oversight and fostering private investment can promote private-sector-led growth and diversification.