Country Report Libya November 2009

Outlook for 2010-11: Inflation

After years of negative or low inflation, consumer prices picked up sharply in 2007-08 as the government slowly relaxed its control over the domestic market and economic growth strengthened. With domestic liquidity having risen steeply on the back of high oil prices, inflation averaged 10.4% in 2008, according to Central Bank figures. Lower prices for imported goods and commodities-with lower international food prices having the largest impact-and lower consumer demand will have caused inflation to fall to an estimated 2% in 2009, and consumer prices contracted by 0.6% in the year to September. Inflation is forecast to pick up again to an annual average of 5.3% in 2010-11 as expected reductions in subsidies are implemented, consumer confidence returns and higher oil revenue increases domestic liquidity. A slightly stronger Libyan dinar is likely to temper imported inflation during 2010-11.

© 2009 The Economist lntelligence Unit Ltd. All rights reserved
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