Country Report Libya November 2009

Outlook for 2010-11: External sector

Libya's current account is dominated by hydrocarbons exports. Recent actual current-account data for 2008 were lower than estimated, and we have revised down our expectations for the current-account surplus. Goods export earnings are expected to grow to an average of US$41bn in 2010-11 from an estimated US$33bn in 2009 owing to higher oil prices and production increases. Goods imports will remain relatively stable at an average of US$25bn in 2010-11, depressed by lower commodity costs but sustained by demand for inputs for government development projects. Consequently, we forecast that the trade surplus will widen from US$9.9bn in 2009 to US$18.3bn in 2010, before narrowing to US$13.6bn in 2011. The services account is mainly composed of oil-sector payments abroad, which will follow trends in the sector. We therefore expect the services deficit to remain relatively constant at an average of US$3.8bn in 2010-11. The income surplus is forecast to increase owing to growth in payments from Libya's rapidly expanding investments abroad and slower growth of inward foreign investment. The total current-account surplus is therefore expected to rise from an estimated US$6.9bn (15% of GDP) in 2009 to US$15bn (25% of GDP) in 2010 and US$11bn in 2011, roughly following the trend in oil prices.

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