Libya

Chart 1 is a political map of Libya.

Libya is classified as an upper-middle-income country (UMIC) located in North Africa, bordered to the north by the Mediterranean Sea, to the west by Tunisia and Algeria, to the south by Niger and Chad, and to the east by Sudan and Egypt.

Libya is the fourth-largest country in Africa (after Algeria, DR Congo and Sudan) and the 17th-largest in the world in terms of land surface, covering an area of approximately  1.76 million km², about 1.2% of the world's land surface. However, despite its vast land area, most of Libya's territory is desert, notably part of the Sahara, with limited arable land mostly located along the Mediterranean coast.

The country’s Mediterranean coastline extends over 1 770 kilometres, making it the longest in Africa’s northern region. Because the Mediterranean Sea directly links Libya to Europe, the country is heavily impacted by the flow of migrants passing through or seeking work to finance their journey to Europe.

Libya’s geography is dominated by vast desert plateaus covering most of the national territory, including the Sahara, with only a narrow coastal plain supporting significant settlement and agriculture. The country experiences a hot, arid climate in the interior, while the coastal strip enjoys a more temperate Mediterranean climate with seasonal rainfall rarely exceeding 400 millimetres annually. Rainfall is highly variable and drought-prone, further constraining agricultural production and water availability.

Libya shares borders with six countries, which positions it as a strategic transit point between North Africa, the Sahel and the Mediterranean region. Its relationships with neighbours are shaped by historical migration, trade and security dynamics. Libya is a member of the African Union (AU), the Arab Maghreb Union (AMU), the Common Market for Eastern and Southern Africa (COMESA) and one of the 12 members of the Organisation of Petroleum Exporting Countries (OPEC). The country holds the largest proven oil reserves in Africa, about 2.8% of the world’s proven crude oil reserves. In 1998, former president Muammar Gaddafi established the Community of Sahel-Saharan States (CEN-SAD) that became the most recent among the eight regional economic communities recognised by the AU, with its secretariat originally located in Tripoli but relocated to N'Djamena, Chad in 2020. CEN-SAD and AMU have faced significant operational and political challenges, including overlapping memberships with other regional economic communities, political instability in member states, limited financial resources and tensions between member states.

Prior to the civil war, Libya exerted considerable regional influence through its oil exports and its role in regional migration and security arrangements, particularly as a route for trans-Saharan migration to Europe, but was also allegedly involved in the internal affairs of neighbours.

The country is administratively divided into 22 districts, known as shabiyat, with Tripoli serving as the capital and the largest city. Benghazi is the second-largest city and an important administrative and economic centre. Over 76% of the population resides in urban areas, particularly along the coastal belt, while the desert interior supports only sparse, largely nomadic populations, such as the Tuareg and Tebu communities. Infrastructure development is concentrated in coastal cities, while the rural interior remains underdeveloped.

The estimated total population in 2023 was about 7.3 million, with a median age of 28.3 years. Approximately 28.1% of residents are under the age of 15, reflecting a youthful demographic profile shaped by historically high fertility rates, although these have begun to decline.

Libya’s political history is marked by Italian colonisation, independence in 1951 under King Idris I, the 1969 military coup led by Muammar Gaddafi and the collapse of the Gaddafi regime during the 2011 uprising. The subsequent decade has been characterised by political fragmentation, recurring civil conflict and a lack of unified national institutions. The country remains in a prolonged transitional phase, with rival administrations competing for legitimacy and intermittent efforts at national reconciliation. Libya’s current governance structure is a contested hybrid system with parallel institutions in the east and west, weak separation of powers and a judiciary facing capacity constraints. Major constitutional moments include the adoption of an interim constitutional declaration in 2011 and ongoing debates over a permanent constitution.

Libya’s economy is heavily dependent on oil, which accounts for over 90% of government revenues and export earnings. The GDP at market exchange rate was estimated at US$36.8 billion in 2023, although output remains volatile due to political instability and recurrent interruptions in oil production.

With a Gross National Income (GNI) per capita of US$7 570 in 2023, Libya has maintained its upper-middle-income country status since the post-1989 World Bank income classification. GDP per capita in 2023 was approximately US$9 988, yet this figure conceals wide disparities between those with access to public-sector salaries in urban areas and those reliant on informal or subsistence activities in rural regions. The informal economy, encompassing unregistered trade, informal transport and agricultural work, is estimated to comprise up to 15.4% of GDP.

The country’s social context is marked by rising poverty and vulnerability, especially among internally displaced people, the unemployed and residents of conflict-affected areas. The collapse of state services and the expansion of the informal sector during the civil war have eroded living standards for many, despite Libya’s substantial oil wealth.

Chart 2 presents the Current Path of the population structure, from 1990 to 2043.

A country's population characteristics play a crucial role in shaping its long-term social, economic and political foundations. Therefore, analysing a nation's demographic profile provides valuable insight into its potential for development.

Libya includes a diverse population made up of various ethnic groups, including Arabs, Berbers (Amazigh), Tuareg, Tebu and smaller communities of sub-Saharan African descent. Amazigh and Arab account for about 97% of the population. Libya has long been a society where tribal affiliation carried greater weight than a unified national identity. Similar to Somalia, a person’s clan or tribal ties have traditionally served as the main source of status, security and access to resources.

Although Arabic is the official language and Libyans share a common religious and cultural foundation rooted in Islam and Arab-Berber traditions, the country remains deeply fragmented. Its various regions and tribes maintain distinct customs, dialects and historical trajectories, which continue to shape social and political life. While these groups have distinct languages, customs and historical experiences, they all share Libyan citizenship and are bound by a common national identity tied to the country's borders, institutions and historical trajectory.

Libya’s population structure reveals a transition from a predominantly youthful society towards a more mature and ageing demographic profile. In 1990, the population was 4.4 million, with  41% under 15 years, 30% aged 15-29, 26% aged 30-65, and less than 3% over 65. In 2023, the total population rose to 7.3 million.

In 2012, Libya experienced a significant population decline of approximately 164 000 people, largely as a direct consequence of the civil war. Rising conflict-related mortality, combined with mass flight across the country’s borders, reshaped the demographic landscape. Thousands of Libyan families, along with large numbers of migrant workers, most of them of working age, sought refuge in neighbouring countries to escape the violence and instability. Historically, Libya has been a key country of destination in North Africa, attracting labour not only from neighbouring countries but also from Western Africa, the Middle East and South Asia. Before 2011, an estimated 2.5 million migrants were employed across key sectors, including services (healthcare, domestic work and retail), industry (construction and light manufacturing), energy (oil production and related services) and agriculture.

The toll of the conflict was severe; an estimated 21 490  persons were killed, 19 700 injured and 435 000 displaced from their homes. These dynamics disproportionately affected young adults, particularly men, removing a vital segment of the labour force at a critical stage of national development. As a result, the population aged 15-29 fell by about 13% in 2012, dropping from around 1.7 million in 2011.

In the years leading up to the 2011 revolution, Libya was home to an estimated 1.4-2.5 millon migrant workers, the majority originating from sub-Saharan Africa, Egypt and Asia. They were employed across key sectors such as oil, construction and services, forming the backbone of much of the country’s labour force. Once the conflict broke out, within just a few months, around 790 000 migrant workers and their families left the country, seeking safety in neighbouring states including Tunisia, Egypt and Niger.

Interestingly, while mortality and displacement weakened the youth and working-age population, the fertility rate rose by about 3.4% between 2011 and 2012. This suggests that, despite the turmoil, Libyan families may have turned to higher fertility, whether as a coping mechanism in uncertain times, a demographic rebound effect or a reflection of displaced households returning to traditional social norms. Libya’s traditional social norms encourage larger families and strong kinship ties.

Libya’s population will reach 9 million in 2043, with the under-15 cohort dropping further to 20.6%. The 15-29-year-old group remains significant at 21.7%, adults aged 30-64 constitute 44%, and the population over 65 increases rapidly to 13.8%. This progression signals a declining youth dependency ratio and a growing elderly cohort.

The demographic transition underway in Libya is typical of upper-middle-income Africa, but the country’s shift is more pronounced. In 2023, Libya’s median age was about 28.3 years, with roughly 28% of the population under 15 and 5.1% over 65, reflecting high fertility in previous decades and a gradual decrease in the total fertility rate.

Urbanisation is a defining feature of Libya’s demographic profile. In 2023, about 77% of the population resided in urban centres, primarily along the Mediterranean coast in Tripoli and Benghazi. The rural population is concentrated in the desert interior among nomadic groups such as the Tuareg and Tebu. The urban concentration intensifies the demand for employment, services and infrastructure among youth and working-age adults. At the same time, it facilitates the delivery of essential services such as water, sanitation, electricity, healthcare and education, since concentrated populations reduce the per-capita cost of infrastructure. However, the rising elderly share signals increasing needs for social protection and healthcare in urban zones.

Libya’s evolving age structure has direct implications for economic and social development. The expansion of the working-age population since 1990, from 54% to 67% in 2023, creates a window for a potential demographic dividend. When the ratio of the working-age population to dependants (children and elderly) is 1.7 to one or higher, countries often experience more rapid growth, known as the demographic dividend, provided the workforce is appropriately skilled and absorbed in the labour market. Libya has clear potential given the positive ratio of its working-age population to dependants. In 2023, Libya’s ratio of working-age population to dependants was estimated at 2:1, meaning there were two individuals of working age for every one dependant.

Additionally, labour market reforms are essential to create a conducive environment for job creation and economic growth. Furthermore, as the working-age population peaks, planning for future healthcare needs becomes increasingly important to ensure that the anticipated rise in chronic diseases associated with ageing does not overwhelm existing systems. On the Current Path, Libya’s ratio will decline slightly to the ratio of 1.9:1 by 2043.

Compared to most African countries, Libya has a small youth bulge at 34% in 2023 - defined as the ratio of the population between 15 and 29 years to the total adult population (15+ years of age). In addition to the requirement for more spending on education, health services and job creation, a large number of young adults can lead to positive political change in a country through youth activism, but they can also carry the seeds for socio-political instability in the absence of economic opportunities. On the Current Path, Libya’s youth bulge will decline to 27.3% by 2043.

Strategic investments in education, economic diversification and healthcare are critical to ensuring that Libya's demographic transition supports sustainable development and enhances overall societal well-being.

Chart 3 presents a population distribution map for 2023.

The civil war profoundly reshaped Libya’s population distribution, both by driving large numbers of people out of the country and by displacing communities within its borders. At the height of the conflict between 2011 and 2020, hundreds of thousands of Libyans were uprooted from their homes, often forced to move multiple times in search of safety. By mid-2020, the number of internally displaced persons (IDPs) peaked at around 425 000. Most of these displacements originated in front-line cities such as Tripoli, Benghazi, Sirte and Misrata - urban centres that bore the brunt of intense fighting, airstrikes and siege conditions. However, following the 2020 ceasefire, a gradual return movement emerged, with many households striving to resettle in their hometowns and reconstruct their lives in the aftermath of war.

In 2023, the country's overall population density stood at approximately 0.04 persons per hectare, while urban areas recorded a significantly higher average density of 23.8 persons per hectare.  Libya’s population density remains low compared to other African UMICs. Libya's population distribution is significantly influenced by its geographical and climatic conditions, with approximately  90%  of the population concentrated along the Mediterranean coast, a region that accounts for less than 10% of the country’s total land area. This concentration is largely attributed to the more hospitable climate and the availability of resources, contrasting sharply with the sparsely populated interior desert areas that dominate over 90% of the country's geography.

The coastal city of Tripoli is the capital and the largest city of Libya, with a population of over one million people (more than 15% of the total population). Tripoli serves as the nation’s political, economic and cultural centre. Benghazi is the second-largest city with a population of more than  600 000 people. These two coastal cities serve as major population hubs, reflecting not only historical settlement patterns but also the contemporary socio-economic pull factors such as employment opportunities, education and healthcare services that these urban centres provide.

Chart 4 presents the urban and rural population in the Current Path, from 1990 to 2043.

When strategically managed, urbanisation can serve as a powerful engine for economic growth and development. It facilitates the efficient delivery of essential services such as education, healthcare, housing and transportation, while also creating environments that foster innovation, stimulate entrepreneurship and enhance overall productivity. In Libya, the continued expansion of urban cities presents a valuable opportunity to diversify the economy and improve living standards.

However, this potential remains constrained by several persistent challenges that have all been accentuated by the civil war. These include electricity shortages, underdeveloped infrastructure, a mismatch between available skills and labour market demands, cumbersome and inefficient regulatory frameworks, and limited access to financial services for small and medium enterprises. Together, these barriers weaken the economic dynamism of urban areas and contribute to rising unemployment and social inequality.

In 1990, 72.2% of the population lived in urban areas, with 27.8% residing in rural regions. By 2023, the urban share had reached 76.8% and the rural population had declined to 23.2%. This transition is linked to Libya’s oil-driven economic transformation that spurred rural-urban migration, especially toward major coastal cities such as Tripoli and Benghazi. The desert interior, by contrast, supports only scattered rural populations, predominantly among Tuareg and Tebu nomadic groups.

Libya’s urbanisation is among the highest in North Africa. In 2023, the country’s urban population share exceeded the North African average of approximately 52%. Libya’s level is also significantly above the global average of 57%. Compared to other UMICs in Africa, the urban population share in Libya is notably higher than Egypt (43%) and marginally above Algeria (74%). Within the UMIC in Africa group, urbanisation accelerated from 52.1% in 1990 to 69.7% in 2023, and will reach 76.5% by 2043. Libya’s urbanisation trajectory is both earlier and more pronounced than the income group average, which only reached an urban majority in 1988.

The rapid urbanisation process exerts mounting pressure on Libya’s urban infrastructure, housing and public services.

Chart 5 presents GDP in market exchange rates (MER) and growth rate in the Current Path, from 1990 to 2043.

The Libyan economy is heavily dependent on its oil sector, which accounts for an estimated 97% of government revenue and approximately 93% of total export value in 2023. This heavy dependence makes the economy highly vulnerable to internal and external shocks. Ongoing rivalries between the Government of National Unity in Tripoli and eastern-based factions have repeatedly triggered armed blockades, acts of sabotage and closures of vital oil infrastructure.

As a result, oil production, which had exceeded 1.7 million barrels per day prior to the start of the 2011 civil war, has fluctuated wildly, sometimes plummeting to below 100 000 barrels per day. These disruptions create fiscal instability, reduce the state’s ability to fund essential services and undermine public sector salaries, all of which erode public confidence and economic performance.

Efforts to diversify the economy have been limited, and the oil sector's dominance continues to shape Libya's fiscal landscape. Addressing this overreliance remains a critical challenge for the country's long-term economic development.

Libya’s GDP trajectory at market exchange rates, measured in constant 2017 US dollars, demonstrates persistent volatility, shaped by oil dependence and political instability. In 1990, Libya’s GDP was US$52.1 billion. By 2023, GDP had contracted to US$36.8 billion, reflecting a decline of 29.36% since 1990, with the most severe contractions occurring during the 2011 civil conflict and the 2020 crisis linked to renewed fighting and the COVID-19 pandemic. The GDP fell sharply to US$44 billion in 2011, rebounded to US$82.2 billion in 2012, then dropped again as renewed instability and oil production disruptions persisted. By 2043, GDP will reach US$74.3 billion.

In sum, Libya’s GDP path from 1990 to 2043 is defined by conflict-driven contractions, oil-market fluctuations and periods of partial recovery. The country’s unique combination of a young, urbanising population and a highly oil-dependent, informalised economy explains the pronounced gap between its actual GDP growth and the more stable, diversified expansion observed amongst its UMIC peers in Africa.

Chart 6 presents the size of the informal economy as per cent of GDP and per cent of total labour (non-agriculture), from 2020 to 2043. The data in our modelling are largely estimates and therefore may differ from other sources.

The informal sector represents a critical pillar of Libya’s economy, providing income and livelihoods for a large share of the population, particularly among low-income groups and rural communities. In the absence of sufficient formal job opportunities, many Libyans rely on informal activities as their primary source of employment and income security.

A substantial proportion of the labour force is engaged in informal work, with strong concentrations in agriculture, small-scale trade, manufacturing, transport, construction and a wide range of service activities. These sectors often operate outside official regulation and taxation but are essential to household survival, especially in regions where formal employment is scarce or disrupted by conflict and instability.

Often characterised by unregulated and unrecorded activities, the informal sector plays a significant role in many developing countries by providing employment and income to a substantial portion of the population. Beyond its role in job creation, the informal economy functions as a social safety net, absorbing workers excluded from the formal labour market, such as youth, women and those with limited education or skills. While informal enterprises typically suffer from low productivity, limited access to finance and a lack of social protections, they remain indispensable for sustaining livelihoods and maintaining economic resilience in times of crisis.

Libya's reliance on oil, a sector that traditionally offers limited employment opportunities outside formal state-controlled enterprises. Nonetheless, the persistent economic instability and lack of diverse formal employment options likely drive many into informal work, particularly in urban areas and cross-border trade. With the limited formal sector opportunities, most of the workforce in Libya is employed in the low-value-added informal sector. Around 23.8% of the total labour force was in the informal sector in 2023, just about 0.8 percentage points above the average for UMICs in Africa.

The size of Libya’s informal economy was estimated at 15.4% of GDP in 2023, slightly above the average of 15.1% for UMICs in Africa. On the Current Path, the size of the informal sector will decline to 14.1% in 2043, a figure that will be slightly below the estimated average for UMICs in Africa in that year.

Chart 7 presents GDP per capita in the Current Path, from 1990 to 2043, compared with the average for the Africa income group.

With a GNI per capita of US$7 570  and a GDP per capita of US$8 988 (PPP, and constant 2017 US$) in 2023, Libya has maintained its UMIC status. These figures underscore Libya’s sustained relative position within the UMIC category. However, the country’s economic performance has not returned to its pre-conflict peak. In 2010, just prior to the outbreak of civil unrest, Libya’s GDP per capita stood at US$12 800 (PPP). Despite post-2011 recovery efforts, recurring political instability, disruptions in oil production and weakened institutions have hindered sustained economic growth, causing per capita income levels to remain below their historical high. This stagnation highlights the structural challenges facing the Libyan economy and the need for comprehensive reforms to restore long-term prosperity once the war ends.

With a projected modest increase in GDP growth coupled with slower population growth by 2043, Libya’s Current Path shows a slight increase in GDP per capita to US$13 740. While slower population growth can alleviate pressure on public services and employment markets, the limited pace of economic transformation means that gains in per capita income will remain constrained. As a result, Libya’s forecast GDP per capita in 2043 will fall short of the projected African average for UMICs in Africa, which is forecast to reach approximately US$14 480. This disparity underscores the need for deeper structural reforms, economic diversification and improved governance to enhance productivity and ensure that economic growth translates into broad-based improvements in living standards.

Chart 8 presents the rate and numbers of extremely poor people in the Current Path from 2020 to 2043.

Monetary poverty only tells part of the story, however. In addition, the global Multidimensional Poverty Index (MPI) measures acute multidimensional poverty by measuring each person’s overlapping deprivations across 10 indicators in three equally weighted dimensions: health, education and standard of living. The MPI complements the international US$2.15 a day poverty rate by identifying who is multidimensionally poor and also shows the composition of multidimensional poverty. The headcount or incidence of multidimensional poverty is often several percentage points higher than that of monetary poverty. This implies that individuals living above the monetary poverty line may still suffer deprivations in health, education and/or standard of living.^[x]

According to the 2024 Global MPI report, approximately 2% of Libya’s population was classified as multidimensionally poor — individuals deprived in multiple overlapping areas such as health, education and living standards. An additional 11.4% of the population was identified as vulnerable to multidimensional poverty, meaning they were on the brink of experiencing acute deprivations.

Using the international extreme poverty threshold of US$2.15 per person per day, around 4.5% of Libyans, or roughly 331 760 individuals, were living in extreme poverty in 2023. Encouragingly, this share will decline significantly to just 0.5%, or approximately 45 350 people, by 2043.

At the US$6.85 per day poverty line, which is more reflective of living costs in UMICs, around 60% of Libyans, equivalent to nearly 4.4 million people, were living below this threshold in 2023. While this rate will decline to 25.3% by 2043, the number of people classified as poor under this definition will still total approximately 2.3 million. These figures reflect the broader socio-economic challenges that persist despite Libya’s upper-middle-income status and highlight the complexity of poverty in Libya. While extreme poverty is expected to decline, a large portion of the population will remain economically vulnerable. This underscores the importance of not only pursuing macroeconomic growth but also implementing inclusive policies that improve education, healthcare, housing and job opportunities, especially for marginalised and rural communities.

Libya’s progress in poverty reduction remains contingent on an end to the civil war, political stability, effective governance and sustained economic growth. The persistence of a sizeable population below the poverty line underscores continued vulnerability to renewed conflict, fiscal shocks and institutional fragility.

Chart 9 depicts the National Development Plan of Libya.

Libya’s path toward recovery and progress is being guided by two major strategic frameworks: the National Development Agency’s (NDA) Vision 2030 and the more expansive National Vision 2044. These initiatives aim to rebuild the nation's infrastructure, diversify its economy and foster sustainable growth after years of conflict.

Libya’s Vision 2030, spearheaded by the National Development Agency (NDA), is more than a policy framework; it is a national compass guiding the country toward shared prosperity, inclusive growth and meaningful global engagement. Since its launch in May 2025, NDA has emphasised that this vision is intended not merely as a set of goals but as a transformational roadmap for rebuilding Libya’s institutions, diversifying its economy and improving citizens’ quality of life. The vision is structured around four major pillars and flagship goals:

1. Diversify the economy away from heavy dependence on oil. Focus on sectors including agriculture, industry, logistics, renewable energy, healthcare and education.
2. Infrastructure projects:
1. Build a strategic road network of about 1 000 km by 2030.
2. Modernise water networks.
3. Upgrade and expand airports (e.g. Benghazi International Airport, Sirte Gulf International Airport).
3. Improve basic services: Investments in sanitation, renewable energy (especially solar), healthcare and education.
4. Enhance regional stability and external partnerships: The Vision emphasises Libya’s role in reducing irregular migration pressures and sees foreign investment partnerships (e.g. with the UK) as important for stability and growth.

In sum, Vision 2030 reflects the collective determination of Libya to rise above its past challenges, rebuild its foundations and reimagine its role on the global stage. It seeks to transform national aspirations into tangible outcomes by driving economic diversification, modernising critical infrastructure, expanding access to essential services, strengthening social inclusion and advancing institutional reform. Central to this vision is the recognition that sustainable progress cannot be achieved in isolation; it requires dynamic partnerships within Libya’s regions, across its society, and with the wider international community to ensure that growth is both inclusive and resilient.

Chart 29 presents GDP per capita in purchasing power parity (PPP) in the Current Path and each of the eight sectoral scenarios, plus the synergistic effect and the Combined scenario. The data is from 2020 with a forecast to 2043.

Libya gets a boost to its GDP per capita in all sectoral scenarios. In other words, all scenarios contribute to GDP per capita growth above the Current Path. However, the AfCFTA scenario has the most significant positive impact on GDP per capita with an increase of about US$1 000 above the Current Path in 2043. This implies that, if the government of Libya promotes deeper regional trade integration, it could generate substantial economic gains. This would mean that Libya has the potential to benefit more than average from the removal of tariff and non-tariff barriers, improved access to continental markets and participation in regional value chains. In effect, AfCFTA offers Libya a chance to diversify beyond oil dependence, enhance competitiveness and stimulate job-creating growth.

To maximise this impact, the Libyan government must prioritise the swift and effective implementation of AfCFTA commitments. This includes harmonising national laws with AfCFTA provisions, reducing customs and logistics bottlenecks and cutting unnecessary regulatory barriers. Trade facilitation measures such as digital customs systems, upgraded ports and efficient border management will be crucial in lowering trade costs.

At the same time, Libya must prepare its businesses to seize new opportunities. Support should be provided for exporters to meet rules of origin requirements, improve product standards and access trade finance. Small and medium enterprises, in particular, will need tailored assistance to integrate into continental supply chains. Focusing on sectors with strong regional demand, such as logistics, ICT services, agriculture and renewable energy, would enable Libya to play to its strengths while diversifying its economy. In parallel, attracting foreign and domestic investment will be essential. The government should strengthen the investment climate through regulatory reforms, predictable tax and licensing regimes, and by opening key sectors to competition. Leveraging digital solutions, such as paperless trade and e-payment systems, will also help integrate Libya more fully into the emerging African digital economy.

The governance scenario generates the second-largest gain in GDP per capita, adding about US$570 above the Current Path. This highlights the economic benefits Libya could achieve by adopting a more progressive tax system, tackling corruption, improving institutional performance and strengthening socio-political stability. Advancing democracy, promoting gender empowerment and expanding targeted social assistance for the poorest households would further support inclusive growth and improved living standards.

Within this framework, social protection is a key driver of this outcome. At the micro level, direct support to vulnerable groups increases household consumption, productivity and employment. At the macro level, social spending supports growth as a countercyclical measure during downturns and a long-term enabler of development by enhancing skills, reducing inequality and building resilience.

Effective governance ensures that public resources are used efficiently to drive development and improve citizen well-being. When governance is strong, public investment attracts private capital by delivering critical infrastructure—such as energy, transport, logistics and communications—necessary for businesses to operate productively.

The third-largest increase in GDP per capita comes from the Manufacturing scenario, which adds about US$510 above the Current Path by 2043. This is followed by the Financial Flows scenario, which raises GDP per capita by roughly US$340 over the same period.

Given the small size of the sector, the Agriculture scenario is the least impactful in terms of GDP per capita, with an increase of US$60 compared with the Current Path in 2043. Even with limited arable land, agriculture can reduce Libya’s extreme dependence on food imports. Improving domestic production even modestly has strategic value. By investing in agro-processing industries, the country can transform raw agricultural products into higher-value goods, stimulating rural development, creating employment opportunities and establishing stronger supply chains that link farmers to domestic and regional markets. Agro-processing not only supports food security but also lays the foundation for broader manufacturing growth.

Libya requires a holistic development strategy to achieve lasting results. Reforms must be coordinated across industries rather than pursued in isolation. A comprehensive policy push—linking agriculture, manufacturing, governance, and security—offers the most effective pathway to inclusive, resilient and sustained economic growth. Such an integrated approach would not only diversify the economy beyond hydrocarbons but also improve livelihoods, reduce inequality and foster long-term stability.

Chart 30 presents poverty in the Current Path and for each scenario, from 2020 to 2043. The user can select the number of extremely poor people or the percentage of the population.

Using the World Bank upper-middle-income monetary poverty line (US$6.85 per person), all the scenario interventions contribute to poverty reduction in Libya; however, the Governance scenario contributes most significantly to reducing the poverty rate by 2043. An important reason for these improvements is that the scenario includes a social transfer component. In the Governance scenario, the poverty rate will decline to 21.2% in 2043, compared to the Current Path of 25.3%, a 4.1 percentage points below the Current Path. This is equivalent to about 370 930 fewer people living in poverty at US$6.85 per day compared to about 2.3 million on the Current Path in 2043.  Good governance expressed through effective regulation, transparency and strong control of corruption is essential for ensuring that all citizens, particularly the poor, can participate in and benefit from economic growth. When institutions function well, public resources are managed efficiently, regulatory frameworks are predictable and opportunities are more equitably shared across society. By contrast, corruption erodes this foundation. It reduces the government’s capacity to deliver essential services such as education, healthcare and infrastructure, while distorting the allocation of public spending in favour of narrow interests. The result is that the poorest and most vulnerable are left with fewer opportunities to escape poverty, as they face higher costs, weaker services and limited access to justice and economic opportunities.

Strengthening governance, therefore, has a dual impact: it boosts economic efficiency by reducing waste and uncertainty, and it promotes equity by ensuring that growth translates into broader social benefits. For Libya, this means that reforms aimed at enhancing transparency, building accountable institutions and implementing fair regulatory policies are not just governance improvements; they are also powerful tools for poverty reduction and inclusive development.

The Governance scenario is followed by the AfCFTA and the Large Infrastructure and Leapfrogging scenarios in terms of reductions in poverty. The poverty rate in the AfCFTA scenario will be 21.8%, thus lifting 318 510 people out of extreme poverty, compared to the 25.3% in the Current Path in 2043. The Large Infrastructure and Leapfrogging scenario will lift 165 720 Libyans out of extreme poverty relative to the Current Path in 2043.

Chart 31 presents GDP in the Current Path and in the Combined scenario from 2020 to 2043. The data is in US$2017 and at market exchange rates (MER).

The Combined scenario combines all eight sectoral scenarios, representing an integrated development effort aimed at removing the key constraints to sustained and inclusive growth in Libya. Assuming that the Combined scenario is implemented, Libya could expect a significant improvement in its growth prospects. In this scenario, the average economic growth rate between 2026 and 2043 will be 5.4%, compared with 3.5% on the Current Path over the same period. The size of the economy measured in GDP at the market exchange rate (MER) will be US$28.8 billion larger than the Current Path in 2043, thus a 38.7% growth compared to the Current Path.

Chart 32 presents GDP per capita in purchasing power parity (PPP) in the Current Path and the Combined scenario. The data is from 2020 with a forecast to 2043.

The impact of the Combined scenario on GDP per capita is significantly greater than the sum of the individual thematic scenarios. By 2043, Libya’s GDP per capita will be US$3 150 higher than on the Current Path, demonstrating that a coordinated push across all development sectors could substantially improve the living standards of the Libyan population.

Chart 33 presents the value added by sector in the Current Path and in the Combined scenario, for 2023 and 2043. The data is in US$ 2017 and as a percentage of GDP.

Our modelling provides forecasts in six economic sectors, namely agriculture, energy, materials (including mining), manufactures, services and ICTech.

In 2023, the services sector was the backbone of Libya’s economy, contributing US$24.4 billion in value added (66.2% of GDP). In the Current Path, by 2043, services will nearly double in size to US$46.1 billion; however, a decline in contribution to 62.1%, reflecting faster growth in other sectors. In the Combined scenario, services strengthen slightly, accounting for 62.6% of GDP. This is equivalent to US$64.5 billion, a gain of 0.54 percentage points above the Current Path. This indicates that while services will continue to dominate, diversification will reduce their relative weight in the economy.

The energy sector remains the second-largest contributor. In 2023, it generated US$8.4 billion (22.8% of GDP). Under the Current Path, this more than doubles to US$18.5 billion, equivalent to 24.9% of GDP by 2043. However, in the Combined scenario, its share will drop to 19.6%, a reduction of 5.3 percentage points. This decline underscores the benefits of economic diversification away from heavy dependence on hydrocarbons.

Manufacturing starts from a relatively small base of US$2.7 billion (7.4% of GDP) in 2023. In the Current Path, it grows gradually to US$6.3 billion (8.5% of GDP) by 2043, reflecting modest industrial development. In the Combined scenario, the manufacturing sector share will rise more significantly to 11.8% of GDP in 2043, 3.3 percentage points higher than the Current Path. This shift highlights the potential of industrial policy and investment in value-added production to accelerate economic transformation.

The ICT sector is forecast to be among the fastest-growing. By 2043, its contribution could reach 3.2% of GDP (US$3.3 billion) in the Combined scenario, compared to just 1.9% on the Current Path. This expansion illustrates the importance of digital infrastructure and innovation in building a modern, competitive economy. Similarly, the materials sector will expand to 2.3% of GDP, a 0.12 percentage point increase compared to the Current Path.

Finally, although still small, the agriculture sector will also see modest gains. By 2043, its contribution will increase slightly to 0.5% of GDP in the Combined scenario, a 0.04 percentage points higher than the Current Path. This reflects the limited but important role of agriculture in supporting food security and supplying raw materials for agro-processing industries.

In summary, the Combined scenario points to a more diversified Libyan economy by 2043—less dependent on hydrocarbons, with stronger contributions from manufacturing, ICT and other emerging sectors, while services remain the largest driver of value added. Instead of a 2043 economy at US$74.3 billion, Libya’s economy would be U$103 billion.

Chart 34 presents the size of the informal sector in the Current Path and in the Combined scenario, from 2020 to 2043.

In the Current Path, the contribution of the informal sector to Libya’s economy will decline gradually, falling from its 2023 value of 15.4% to 14.1% of GDP (about US$10.4 billion) by 2043. This trend reflects the slow expansion of formal employment opportunities and a modest shift of economic activity into regulated sectors.

In the Combined scenario, the share of the informal economy falls even further, to 9.8% of GDP (around US$10.1 billion) in 2043. Its reduced share of GDP indicates that sustained, broad-based growth in formal sectors such as manufacturing, services and ICT can absorb a substantial portion of informal activities.

This outcome highlights the transformative potential of coordinated, cross-sectoral reforms. By strengthening governance, creating formal jobs, expanding access to finance and improving infrastructure, Libya can progressively reduce reliance on informal employment. A shrinking informal sector share does not imply fewer livelihoods; rather, it suggests a gradual formalisation of economic activity, with more workers benefiting from social protection, higher productivity and secure, decent jobs.

Chart 35 presents poverty in the Current Path and the Combined scenario, 2020 to 2043.

In the Combined scenario, by 2043, only 13.5% of the population will be living in poverty using U$6.85, compared to 25.3% in the Current Path. This represents nearly 1.1 million fewer people living in poverty compared to the Current Path. Such a reduction highlights the transformative potential of an integrated development strategy that tackles constraints across multiple sectors simultaneously.

By combining reforms in agriculture, education, health and demographics, manufacturing, finance, trade and infrastructure, the Combined scenario not only raises incomes but also ensures that the gains from growth are more broadly shared. The sharp decline in poverty illustrates how coordinated policy action can directly improve household welfare, strengthen resilience and promote greater social stability.

Chart 36 compares life expectancy in the Current Path with the Combined scenario from 2020 to 2043.

Life expectancy at birth is widely recognised as one of the most comprehensive indicators of a population’s overall health and well-being. It reflects not only mortality patterns but also access to healthcare, nutrition, sanitation, education and broader living conditions. As such, it serves as a powerful proxy for the strength of a country’s human capital base.

In Libya, life expectancy is relatively high by regional standards, reflecting improvements in healthcare access, nutrition and living conditions over recent decades. This is a positive foundation for human capital development, as a healthier population is generally able to work longer, remain more productive and contribute more effectively to the economy.

Since 2020, Libya’s life expectancy at birth has improved by about 0.8 years to 77.3 years in 2023 and has remained above the averages for UMICs in Africa since 1963. Life expectancy for males stood at 76 years and 78.7 years in 2023. In the Current Path, life expectancy at birth will further improve to 79.9 years by 2043. In the Combined scenario, the average Libyan could expect to live about 2.4 years longer than in the Current Path to 82.3 years. This relatively strong life expectancy is an asset; it must be complemented by investments in education, job creation and governance reforms to transform longer lives into higher productivity, innovation and inclusive growth. Without these, the relatively high life expectancy advantage may not translate into sustained economic diversification or improved living standards.

A population that lives longer but lacks sufficient opportunities for skill acquisition, formal employment or productive engagement risks underutilising its potential. In such cases, the economic gains of high life expectancy are not fully realised.

Chart 37 compares carbon emissions in the Current Path with the Combined scenario from 2020 to 2043. Note that the data is in million tons of carbon, not CO₂ equivalent.

In 2023, Libya released about 13.6 million tons of carbon, and in the Current Path, it will release 17.3 million tons by 2043. Although Libya’s total carbon emissions are modest in global terms, they are relatively high on a per capita basis compared to many African countries, due to the dominance of hydrocarbons in its economy. Like much of Africa, however, Libya faces disproportionate risks from climate change, such as extreme heat, drought and water scarcity, despite its limited overall contribution to global emissions.

The materialisation of the Combined scenario and the associated rapid economic growth in Libya will increase carbon emissions to 19.6 million tons by 2043, about 2.3 million tons above the Current Path in the same year.

Chart 38 compares energy demand and production in the Current Path with the Combined scenario from 2020 to 2043. Production is done in nine types, namely oil, gas, coal, hydro, nuclear, solar, wind, geothermal and other renewables. The data is converted into million barrels of oil equivalent (BOE) to allow for comparisons. Note that energy production could be for domestic use or for export.

In 2023, Libya produced an estimated 217.1 million barrels of oil equivalent (BOE), while domestic consumption stood at just 111.5 million BOE. This resulted in a substantial surplus of 105.6 million BOE, most of which was directed toward export markets. The figures underscore the country’s role as a net energy exporter and highlight the central importance of the hydrocarbon sector to its economy.

Libya’s economic structure is heavily reliant on energy exports, with oil and gas revenues accounting for the overwhelming majority of government income, foreign exchange earnings and investment flows. While this dependence provides fiscal resources, it also exposes the economy to volatility in global energy prices, external demand shocks and the long-term risks of a global energy transition.

In the Current Path, total energy production will continue to outgrow demand so that by 2043, the energy production surplus will be equivalent to 178.8 million BOE. In the Combined scenario, the surplus will decline slightly to 178.2 million BOE. The forecast surplus illustrates both an opportunity and a vulnerability. On one hand, Libya’s abundant hydrocarbon resources continue to be a vital source of revenue and can finance investments in infrastructure and social development. On the other hand, the heavy reliance on a single sector creates structural imbalances, limits diversification and increases susceptibility to boom-and-bust cycles. For Libya to achieve more sustainable and inclusive growth, leveraging its energy wealth to stimulate investment in other sectors will be essential.

Chart 39 summarises the policy recommendations for Libya.

Libya stands at a critical juncture, grappling with political fragmentation, persistent insecurity and an overreliance on oil revenues. Yet, the country also possesses immense potential, underpinned by vast natural resources, a strategic location and a resilient population. To move from fragility to stability and long-term prosperity, Libya must adopt a series of reforms that strengthen institutions, improve governance and diversify the economy, while carefully managing external partnerships.

A first priority is to address the governance deficit that has plagued Libya since the collapse of central authority in 2011. Institutional fragmentation, corruption and the absence of a unified political framework have continued to undermine service delivery and public trust. Tackling these issues requires renewed efforts at national reconciliation and political dialogue to bridge divisions between rival authorities. Beyond elite bargaining, the emphasis must be on building robust institutions that can guarantee stability and continuity, regardless of leadership changes. Judicial reforms, stronger anti-corruption bodies and transparent management of state revenues would provide a foundation for improved rule of law and accountable governance.

Security sector reform remains equally urgent. The proliferation of armed groups has weakened the state’s monopoly on force and left many communities vulnerable. A carefully sequenced programme of disarmament, demobilisation and reintegration (DDR) is essential to reduce militia power and reintegrate fighters into civilian or national security structures. At the same time, Libya must strengthen border management and expand cooperation with neighbouring countries to curb the flow of arms, human trafficking and extremist activity across its porous frontiers. Importantly, peacebuilding should not be limited to top-down processes: empowering local communities to mediate disputes and address root causes of violence will help build grassroots resilience.

Economically, Libya cannot afford to remain dependent on hydrocarbons, even though oil will remain a vital source of national income for years to come. Greater transparency in the management of oil revenues, particularly within the National Oil Corporation and the Central Bank, is crucial to ensure that wealth is equitably distributed and benefits all Libyans. Simultaneously, diversification should be prioritised through investment in agro-processing, renewable energy, infrastructure and service industries. Expanding vocational training and youth employment programs would address Libya’s acute unemployment problem while equipping its young population to drive growth beyond oil.

Decentralisation offers another path to resilience. For too long, power and resources have been concentrated in central institutions that are themselves fragile and contested. Empowering municipalities with both financial autonomy and technical capacity would allow local authorities to deliver education, healthcare and infrastructure more effectively. Decentralisation can also make governance more inclusive, ensuring that policies reflect the needs of diverse communities across the country. Rebuilding human capital by investing in schools, hospitals and training centres must go hand in hand with these efforts.

Finally, Libya’s transition will require constructive and coordinated international support. Too often, external actors have pursued competing agendas that deepen divisions rather than heal them. The United Nations, African Union, European Union and bilateral partners should work toward a common framework aligned with Libya’s priorities. International engagement should also balance short-term humanitarian assistance—vital for displaced persons and flood-affected communities—with longer-term investments in development and institutional resilience. Elections will eventually be necessary to legitimise Libya’s governance structures, but they must be pursued cautiously and only once security and institutional conditions make credible polls feasible.