News / Africa

Violence in Libya Cutting Economic Output

Rebels take their position in front the refinery oil complex, in Ras Lanouf town, eastern Libya, March 10, 2011
Rebels take their position in front the refinery oil complex, in Ras Lanouf town, eastern Libya, March 10, 2011

Fighting in Libya is sharply cutting the nation's economic output and raising the risk facing investors in the oil-rich country.

The assessment comes from Standard & Poor's Ratings Services, which cut the nation's credit rating Thursday because of growing uncertainty.

S&P says international sanctions on Libya and other obstacles make it impossible for the agency to continue monitoring the investment climate in the country, so it is suspending its rating.

The rating agency called the situation in Libya a "civil war" and says the nation could face regime change.

In Egypt, economists say economic growth is also expected to drop.  Finance Minister Samir Radwan says if strikes and other problems do not stop, economic expansion may fall from more than 5 percent to as little as 3 percent.  He also warned that growing demands on the government for economic benefits could push the budget deficit up from 8.5 percent of national output to the equivalent of one-tenth of the GDP.  

Egypt has been hurt by a sharp drop in revenue from tourism and declining foreign investment as a wave of protests pushed long-time leader Hosni Mubarak out of office.  

Some information for this report was provided by AP and Reuters.

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