Outlook for 2011-15

• Political power will remain vested in the Libyan leader, Muammar Qadhafi. Libya will retain its unique jamahiriya (republic of the people) system, but the structures of government will undergo halting reform.
• Colonel Qadhafi's most likely successor is his son, Saif al-Islam Qadhafi. However, he faces entrenched opposition from other elements in the regime, as well as rivalry from some of his siblings.
• Relations with the US and EU will be subject to periodic bouts of tension, despite the resolution of the Lockerbie affair and the scrapping of Libya's weapons of mass destruction programme.
• The hydrocarbons sector will dominate the economy, but non-oil growth will be strong. However, the government's inconsistent and unwelcoming policies risk deterring international oil companies and other investors.
• We forecast that real GDP growth will average 3.8% in 2011-15. Oil output is likely to rise modestly alongside strong growth in the non-oil sector.
• In line with international food and non-oil commodity prices, inflation will spike in 2011, reaching 4%, before flattening out at an average of 3% in 2012-15.
• Current-account surpluses will follow trends in international oil prices, which determine export values, rising to 21% of GDP in 2011 before dropping off to 9.9% in 2015.

Monthly review

• A civil society organisation owned by Saif al-Islam Qadhafi has published a report pointing to human rights failings, and Amnesty International has issued a report that is critical of the refugee situation in Libya.
• The Libya Press news agency has announced that it is closing its office in Tripoli after it faced harassment from security officials.
• Saif al-Islam has dismissed media reports that have hinted at divisions within the Qadhafi family.
• Arab Banking Corporation (ABC) has purchased a 49% stake in Libya's Mediterranean Bank after the Central Bank increased its stake in ABC.
• In a setback for the sector, the start of deepwater drilling by BP in the Gulf of Sirte has been delayed again while a new rig is transported to the area.
• The government has announced plans to triple power generation capacity by 2020.
• Growth in the money supply has slowed during 2010, which may have contributed to containing inflation.