THE IMPORTED INFLATION IN LIBYA

Abstract

The research aims to determine the major foreign countries which are responsible for imported inflation in the Libyan economy, using annual data covering the period from 1990 to 2021.The outcomes of study showed that the Libyan economy heavily depends on the rest of world, particularly in the field of imported commodities as indicated by openness degree which showed that the ratio of imports to gross domestic product has exceeded 20 percent during the period from 1990 to 2021, as well as almost 50 percent of Libyan imports have come from European industrial countries which have experienced increasing in the general price level at the same period. In additional to that historical trends of inflation rate in the major trade partners and Libya showed more or less a positive relationship between rate of inflation in the Libyan economy and inflation rate in main trade partners during the period of study. More specifically, The main trade partners of Libya, namely Italy, German, United Kingdom, France, Spain, and Netherlands, are responsible for imported inflation in the Libyan economy.