Libya Economy Review
Economic trends
Libya has a socialist economy which is almost completely controlled by the government. Libya has one of the highest per capita GDP in Africa (estimated at USD 8,300 for 2006) because of its huge oil revenues and small population. After lifting of the UN sanctions in 2003 (followed by ending of the American embargo in 2004), the government has announced ambitious plans to attract foreign investments particularly in sectors like oil & gas and infrastructure. The GDP growth rate was 4.6% in 2004 and 3.5% in 2005. It is estimated to have reached 3% in 2006. Despite efforts to diversify the economy and encourage private sector participation, extensive governmental controls on prices, credit, trade, and foreign-exchange create growth barriers. IMF forecast a growth rate of 4.6% in 2007. The inflation is under control; estimated at 3% in 2006.
Main branches of industry
Although agriculture is the second-largest sector in the economy, Libya imports about 75% of its food products. Farming is severely limited by scarcity of fertile soil and the lack of rainfall. The chief agricultural products are wheat, barley, olives, dates, citrus fruit, vegetables, peanuts, and almonds. Most of the arable land is located in Tripoli Tania. To increase the area of cultivatable land, a massive water development project called “The Great Manmade River” started in 1984. It would be completed in 2010 and would cost USD 25 billion. The country has huge oil reserves accounting for approximately 97% of total export earnings, 75% of government revenue and 54% of the GDP. In addition, gypsum, salt, and limestone are produced in significant quantities. Industry is less developed, the major sectors being petroleum-refining, food-processing, textiles, and cement.
International trade
After lifting of the US embargo, Libya has started coming back to international trade scenario. Libya is an active member of the UAM (Union of the Arab Maghreb). It has also applied for WTO membership. The top three import partners of Libya are: Italy, Germany, and Japan. The commodities mainly imported are iron & steel, industrial machines, vehicles, cereals, and other food products. EU is Libya’s largest trade block and hence has initiated the ‘Barcelona Process’ to create a free-trade area between the Mediterranean zone and the European Union by 2008.
