The economic context of Libya

Main Sectors of Industry

Libya's 6.7 million population includes a workforce of 2.3 million. Agriculture's share in Libya's economy is negligible, accounting for 1.6% of GDP and employing 9% of the workforce (World Bank). Main products include wheat, barley, olives, dates, citrus, vegetables, peanuts, soybeans, and cattle. Arid climate conditions and the poor quality of the soil severely limit agricultural production. The primary limitation on agricultural production is the landscape, with only approximately 12% of the total 15.4 million hectares being arable. While 470,000 hectares are deemed suitable for irrigation, only around 240,000 hectares are presently irrigated, primarily due to apprehensions regarding the depletion of underground water sources. Cereal crops are grown in coastal regions, where rainfed production or cropping with supplemental irrigation is feasible, as well as in certain arid areas in the south, under complete irrigation.

Industry is the backbone of the Libyan economy because of the strong petrochemical industry. It accounts for 80.3% of GDP, employing 23% of the active population (World Bank). Production includes petroleum, petrochemicals, aluminium, iron, steel, food processing, textiles, handicrafts, and cement. Manufacturing is underdeveloped (3% of GDP). Although the Libyan petrochemical industry, especially the country's petroleum exports, were negatively impacted by the pandemic and the drop of oil prices, the sector showed signs of recovery: Libya's state-owned National Oil Corporation (NOC) announced that the country had extracted over 432 million barrels of crude oil in 2023. Additionally, NOC reported production figures for other petroleum-related products, including nearly 1.24 billion cubic meters of natural gas, almost 2.43 million tonnes of condensates, almost 6.17 million tonnes of petroleum products, and 682,595 tonnes of petrochemical products for the same year.

Services account for 25.2% of GDP and its share in total employment stands at 68% (World Bank). Although this is the second-largest sector in Libya, significant industries, such as tourism and retail, are significantly underdeveloped. Financial services and transportation, however, account for a significant part of the service sector. According to the IMF, as of 2023, Libya's banking sector is described as rudimentary. The country hosts 20 banks, with their combined assets totaling around LYD 143 billion. Loans and credit facilities make up less than 15% of the total assets in the banking sector, while the majority, approximately 60%, consists of balances held at the Central Bank of Libya (CBL).

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