The economy of Libya is primarily dependent on revenues from the oil sector. The sector contributes almost 30% of its gross domestic product (GDP). Libya has one of the highest per capita GDPs on the African continent. The nation had, for long, remained in isolation, due to the UN sanctions. The process of international rehabilitation began a few years back and culminated in 2003-2004 when all sanctions were lifted. The Libyan GDP logged a growth rate of 5.8% year-on-year (y-o-y) in 2006 to reach a value of US$34.1bn. BMI forecasts that the construction industry in the country will grow at an average annual rate of 5.17% during the forecast period of 2008-2012.

Removal of sanctions on the country by the US as well, as the UN has greatly helped the country achieve much of its recent economic growth. The Libyan government has been trying to liberalise the socialistoriented economy. The application for World Trade Organization (WTO) membership, cuts in some of the subsidies, and the announcement of privatisation plans have laid the groundwork for transition to a more market-based economy. The non-oil sectors – manufacturing and construction – have also expanded to include the production of petrochemicals, iron, steel, and aluminium. Some of the major infrastructural projects currently underway in Libya include the US$3bn construction and development of the Tripoli International Airport, construction of two power plants valued at US$1.36bn, and a crude oil pipeline, among others.

The North African nation, however, grapples with a lot of problems, the most severe among them being unemployment. The high levels of unemployment need to be tackled immediately. A recent initiative by the government requires foreign companies investing in the country to transfer skills to Libyan nationals, and is expected to alleviate the problem to a certain extent. The government continues to solicit foreign investment. However, tentative policy formulation and reluctance among some of the regime insiders may impede the flow of investments as well as growth of the economy. Further, current foreign direct investment (FDI) in the economy is concentrated mainly in the hydrocarbons sector at the expense of other sectors of the economy, especially infrastructure and banking. Corruption is also widespread in the country and is a serious cause for concern. Given the country’s heavy dependence on the oil sector for revenues, it should also brace itself for a reduction in its fiscal and current-account surpluses as oil prices fall and oil production begins to stabilise.

This notwithstanding, the country is expected to register a real GDP growth rate of 5.4% y-o-y in 2007.

Moreover, during the forecast period of 2008-2012, Libya’s GDP is expected to grow at an annual average rate of 5.76%. BMI forecasts that the Libyan construction sector is likely to increase its share in the GDP to 3.43% and reach a value of US$2.19bn in 2012.