Libya’s economy experienced dramatic fluctuations in 2024, with political conflicts and institutional crises heavily influencing the nation’s economic trajectory. Oil production, the lifeblood of Libya’s economy, saw significant disruption before rebounding to its highest levels in over a decade by year’s end.
Oil output dropped sharply to 0.54 million barrels per day (bpd) in September due to political tensions, a Central Bank crisis, and the closure of key oil fields. However, production steadily recovered, reaching 1.42 million bpd by December. This resurgence has raised optimism about the potential for economic growth, with projections suggesting oil production could climb to 1.5 million bpd by 2025.
As the cornerstone of Libya’s economy, oil contributes 97% of exports, 68% of GDP, and 90% of tax revenues. This heavy reliance leaves the country vulnerable to fluctuations in production and global oil prices. The lack of diversification continues to expose Libya to significant economic risks.
Other sectors remain underdeveloped. Between 2004 and 2022, manufacturing contributed just 4% of GDP, while agriculture accounted for only 2.8%. Meanwhile, the services sector employs 70% of the workforce, with agriculture employing 9.2%. This imbalance has led to low productivity and high unemployment, with the national unemployment rate at 18.5%, nearly half of which affects youth. These socio-economic challenges compound the instability facing Libya.
The Libyan dinar sharply declined in 2024, reaching 4.91 LYD per USD in the official market by late December. The currency’s depreciation has been attributed to illegal financial practices that drained liquidity and worsened fiscal stability. Efforts by the Central Bank to stem the dinar’s decline continue, but the crisis has highlighted deeper issues in monetary policy and governance.
Inflation rates are expected to stabilize at 2.6% in 2025, reflecting a slight improvement tied to global food price stability. The African Development Bank projects Libya’s economy to grow by 6.2% in 2025, spurred by increased investments in oil production and foreign partnerships to expand hydrocarbon output.
However, the World Bank offers a more cautious outlook, warning of a 2.7% contraction in Libya’s growth for 2024 due to political instability and ongoing conflicts. These systemic issues remain significant obstacles to long-term economic recovery.
Corruption is another critical challenge. Reports estimate Libya has lost $600 billion since 2015 due to widespread corruption and mismanagement. A significant portion of the national budget is consumed by wages and subsidies, limiting investment in productive sectors. Fraudulent contracts, smuggling, and resource mismanagement further drain resources, impeding economic reform and development.
Despite the rebound in oil production, Libya’s reliance on this single sector underscores the need for diversification and stronger governance. Experts emphasize that achieving sustainable growth will require clear policies to broaden the economic base, reduce dependency on oil, combat corruption, and stabilize the political environment. Only through such measures can Libya build a balanced and resilient economy.
