Libyan Economy the Fastest Growing in the Worldhttp://www.tripolipost.com/articledetail.asp?c=2&i=9122 #Libya via@TheTripoliPost
7:27 AM - 1 Sep 12 · Details
| Libyan Economy the Fastest Growing in the World 01/09/2012 11:24:00 |
| By Karen Dabrowska The Libyan economy will be the fastest growing in the world in 2012, as oil production and exports have rebounded faster than originally predicted, Business Monitor International reports in its latest publication Algeria & Libya: Business Forecast Reportwhich includes a 10-year forecast to 2020. Business Monitor projects real GDP growth expanding 58.9% this year, following an estimated contraction of 49.2% in 2011. Despite massive reconstruction needs, gross fixed capital formation will remain weak as investors wait on the side lines until a clearer picture of the security situation and political transformation emerges. The faster than expected improvement in domestic oil production and exports are the key factors driving the broader macroeconomic recovery, particularly given the pronounced destruction to underlying infrastructure as a result of the 2011 war. At this stage, the Libyan story remains all about oil and there is little prospect that significant reconstruction projects can get off the ground before 2013. The hydrocarbon sector has recently posted remarkable recovery since last year’s revolution brought a total halt to international shipments. According to an official from the National Oil Corporation crude oil exports hit a post-war record in April due to the rapid return of production, delays to March shipments, and continued trouble with the country’s largest refinery, Ras Lanouf. At the moment officials are targeting the full resumption of pre-war crude production – estimated at 1.65m barrels a day in mid-2012.Business Monitor has revised its 2012 hydrocarbon production forecasts upwards and now estimates that total liquids output, including condensates, natural gas liquids, and refinery gains, will average 1.66m b/d this year while net exports could average as much as 1.44m b/d. As the Libyan economy is one of the least diversified markets in the world, the sharp recovery in oil production is clearly the main driver of headline growth in the near term. According to estimates by the IMF, hydrocarbons account for 70% of GDP, more than 95% of exports and 90% of government revenues. While this underscores the lack of development in the non-hydrocarbon economy and raises questions about whether any new government will be able to make significant headway in bolstering the private sector, it should also provide a degree of solace that last year’s contraction will prove only temporary. Business Monitor states that Libya’s long term economic outlook until 2021 is by no means certain, not least because of the volatile political climate. Its forecasts are based on the assumption that reform efforts will be piecemeal at best and prone to sudden reversals. As a result, the hydrocarbon sector will remain the key driver of growth. However, even this industry’s ability to sustain forward momentum is in doubt in the light of uncertainties surrounding the domestic policy trajectory. |
