Arab Monetary Fund expects Libyan economy to grow 14.3% in 2025

Libya Observer

2 days ago

The Arab Monetary Fund has forecast strong growth for the Libyan economy this year at 14.3%, with growth expected to slow to 5.9% next year. However, the outlook depends on improving conditions in the country, which would boost investor confidence and increase its attractiveness for investment.
In its periodic Arab Economic Outlook report issued this week, the Fund said Libya's economy relies heavily on the hydrocarbons sector, which accounts for more than 95% of the state's revenues. It noted that growth prospects have been strengthened by the National Oil Corporation's success in raising daily production to over 1.4 million barrels per day by the end of last year.
The report highlighted Libyan authorities' efforts to implement gradual economic measures to improve economic and social conditions. However, it stressed that weak stability and limited institutional capacity remain key challenges to accelerating the pace of much-needed structural reforms.
Regarding inflation, Libya saw relative stability in its inflation rate, which stood at about 2.4% in 2023 before declining slightly to around 2.1% last year, according to the report.
The Fund attributed this stability mainly to the steady exchange rate of the Libyan dinar against the US dollar, which helped contain inflationary pressures and maintain general price stability. Inflation is expected to remain at low levels, with the rate projected at about 1.8% in 2025 before rising slightly to around 1.9% the following year.
While noting that economic conditions in Arab countries as a whole saw relative improvement at the start of 2025 compared to recent years, the Arab Monetary Fund cautioned that this recovery still faces challenges, including the impact of escalating global trade tensions, rising uncertainty, geopolitical developments in the region, and lower energy prices.
The report added that the impact of US tariffs on the region is expected to be limited, given the exclusion of the hydrocarbons sector. However, it warned that these tariffs could indirectly affect Arab economies by slowing growth among their main trading partners.