The International Monetary Fund (IMF) reported that the economy of Libya grew by more than 100 percent in 2012 driven by its oil production.

Ralph Chami, a team leader from IMF said, “Economic growth in 2012 exceeded 100 percent, reflecting a strong recovery from its collapse during the revolution.”

libya flag

Libya’s economy was affected by the revolution in the country, which resulted to the removal of Muammar Gaddafi from power and later killed during the turmoil. The revolution also halted the oil production of the country.

The central bank of Libya reported that the country’s economy declined by 61 percent during the revolution in 2011. According to the central bank, Libya’s economy was impacted by the 72 percent drop of its revenues from oil production. Prior to the chaos, Libya growth rate was 3 percent.

According to Chami, “Latest indicators are pointing to a restoration of hydrocarbon output later this year and a full recovery of growth in the non-hydrocarbon sector in 2014.”

In addition, he said that inflation in Libya declined by 6 percent in 2012 from 16 percent a year earlier. He projected that the inflation rate in the country will drop further this year.

He explained that the lifting of most of the sanctions imposed by the United Nations against Libya such as the assets freeze enabled the central bank to provide foreign exchange liquidity to banks and helped the normalize the operations of commercial banks.

Chami emphasized the challenges faced by Libya in the short-term is the management of political transition, the normalization of security situation, resolving severe institutional capacity constraints and implementing budget disciple while maintaining macroeconomic stability.

According to him, authorities in Libya need to implement major changes in economic policies and institution to provide significant impact on employment. He said,  “Sustainable, employment-generating growth will require a business environment that is conducive to private-sector development with a focus on diversification of the economy to create employment opportunities in the private sector.”

Chami’s said the Libyan government must also restore its hydrocarbon production fully online. Hydrocarbon accounts more than 70 percent of Libya’s GDP, more than 95 percent of exports, and almost 90 percent of revenue. He pointed out that Libya has a prominent spot in international energy market.