Report on GDP growth
a) Produce a report on the economic performance of Libya since 2019 by examining the data on GDP growth rates. Fully analyse the factors that caused the observed fluctuations. (80 marks)
b) Economic theory suggests that there are interlinkages between GDP growth, Unemployment rates and Inflation rates. Do you observe the expected interlinkages between these three economic indicators over this given time period? Explain why.
Sample Solution
Libya’s economic recovery is gathering momentum, boosted by a large increase in hydrocarbon output in 2021. On the demand side, investment and household consumption drove growth. The economy is estimated to have grown by a huge 177.3% in 2021, after a withering contraction of 59.7% in 2020 when the country experienced multiple shocks, including political instability, a decrease in oil prices, and the rapid spread of COVID-19. The recovery in 2021 reflected the low-base effect but also progress toward political stability and the reopening of major oilfields. Inflation increased to 3.7% in 2021 from 2.8% in 2020, with rises in food prices, mainly imported. In December 2021, an initiative was launched to reconcile the monetary policy of the central bank with its Eastern branch.
