Libya's economy is likely to rebound sharply this year from a deep contraction in 2011 as the country rebuilds from civil war and oil production recovers to levels last seen during Muammar Gaddafi's rule, the International Monetary Fund said on Tuesday. In a report on Libya's economy resulting from an IMF mission in May but published only now, the fund forecast growth will skyrocket 116.6 per cent in 2012 following a contraction of 60 per cent last year. Growth next year is likely to slow to 16.5 per cent and 13.2 per cent in 2014 as the effects of the war on the economy wane, the IMF added. Such impressive rebounds in growth are not unusual in countries emerging from conflict when the economy is boosted by rebuilding projects and pent-up private demand. The IMF statement on Libya comes as the country awaits the outcome of a historic vote on Saturday to elect a national assembly. While Libya's government can afford the current high rates of spending in the short term, the IMF estimated that it is not sustainable over the longer term and will push the budget into deficit from 2015. "A more thorough analysis of sustainability based on the present value of financial assets and future oil extraction indicates that from 2012, public spending will exceed the sustainable, long-term level by over 10 per cent of GDP," the fund added. The IMF also warned that continued political uncertainty, insecurity and the possibility of a drop in global oil prices were all risks to Libya's economic outlook. Last week around half of Libya's oil exporting capacity was shut down and production cut by about 300,000 barrels per day (bpd) from about 1.3 million bpd after protests by groups demanding autonomy for eastern Libya, the source of most of the country's oil. The oil price at which Libya's budget is balanced is about$91 per barrel in 2012, an increase from $58 a barrel in 2010, and is set to exceed $100 a barrel from 2013, the IMF said. Brent crude prices traded at about $97 a barrel on Tuesday. A deeper crisis in the euro zone and sharper slowdown in the world economy could push global oil prices lower, which would be pose challenges for Libya's oil dependent economy, the IMF said. As Libya's imports return to normal, consumer price inflation should be contained at 10 per cent despite pressure on prices from supply bottlenecks in housing and transportation, it said. The fund added, however, that a drop in the country's high level of unemployment is not likely without reforms.
