Wanderlust…

The International Reporting (and Life) Adventures of Vivian Salama

Libya’s Economy to Shrink More Than 50% After Conflict, IMF Says

Posted by vmsalama on October 26, 2011

By Vivian Salama

Oct. 26, 2011

Bloomberg — Libya’s economy will contract more than 50 percent in 2011 as eight months of fighting paralyzed its oil industry, the International Monetary Fund said.

“The conflict has had a severe impact on economic activity heavily dependent on hydrocarbons,” which account for more than 70 percent of output and 95 percent of exports, the fund said today in its Regional Outlook for the Middle East and Central Asia. “International sanctions and consequent denial of access to foreign exchange have limited the ability to finance imports of goods and services, resulting in severe disruptions in the non-hydrocarbon sectors.”

The death last week of Muammar Qaddafi, Libya’s president of four decades, may end fighting between loyalists and the one- time rebels who now run the country after seizing the capital, Tripoli, in August. Libya has used up about 62 percent of its oil reserves and urgently needs to find alternative sources of income to rebuild its war-torn economy, interim Prime Minister Mahmoud Jibril said last week.

Qaddafi’s defeat follows uprisings in neighboring Tunisia and Egypt earlier this year that ousted long-time autocratic rulers. Tunisia’s economy will remain flat this year while Egypt’s will grow by 1.2 percent, the IMF forecasts.

Libya’s conflict has had “significant spillovers globally and into neighboring countries,” including a shortfall in oil exports and a decrease in remittances sent home by workers from Libya, especially to Tunisia and Egypt, the IMF said. The conflict also played a role in driving tourists and foreign investors away from the region, it said. (click here to read more…)

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