Libya’s resource economy militia clashes will continue to restrain growth: World Bank

October 4, 2018

The World Bank has concluded that on-gong clashes by Libya’s militias will continue to hamper growth. It implies that as long as Libya is a rentier state, militias will continue to compete for its resources. The conclusions came in the World Bank’s October 2018 Libya Economic Outlook report.

In its summary, the report said that “Given its high reliance on hydrocarbon activities, the performance of the Libyan economy remains strongly affected by security conditions, especially around the main oil fields and terminals.

Improved political and security arrangements reached during the second half of 2017 allowed Libya to more than double its production of oil and to register record growth last year (up 26.7 percent) after four years of recession.

The status quo scenario determined by delayed resolution of the political strife and the persistence of the internal division makes sustained stabilization unlikely.

This situation is characterized by recurring clashes around oil terminals and in large cities, with the result that any nascent recovery triggers further resource competition.

In this context, Libya can only manage to resume oil production to a daily average of 1 million barrel per day (bpd) by the end of this year and keep production around this level over the next few years, which will represent only 2/3rd of potential.

GDP will grow at 6.8 percent in 2019 (a catch-up effect) and an average 2 percent over 2020-21, resulting in a GDP per capita at 62.5 percent of its 2010 level.”

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