Building capacity to help Africa trade better




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Key Facts and Statistics

  • Capital: Algiers
  • Region: North Africa
  • Official language: Arabic
  • Independence Day: July 05, 1962
  • Area: 2,382,000 sq km
  • Population (2018): 42.2 million
  • REC membership: AMU
  • WTO membership: No
  • GDP (2018): US$ 173.76 billion
  • GNI per capita (2017): US$ 3 920
  • Currency: Algerian Dinar

Economic overview

Real GDP growth is estimated at 2.3% for 2019, up from 1.4% in 2018, on the back of a slight rebound in hydrocarbon prices. The hydrocarbon share of GDP fell from 34.2% in 2012 to 19.7% in 2017 (it was 44.3% in 2005), and agriculture and services gained slightly in weight. The relatively subdued economic growth is mainly due to the fall in value added of the hydrocarbon sector, while growth in the non-hydrocarbon sector continues to be modest. The fall in private consumption and the public investment freeze have also been drags on growth.

Fiscal and current account deficits are estimated to rise in 2019 (7.9% and 12.6% of GDP, respectively, compared with 7.0% and 9.6% in 2018). The Oil Stabilization Fund (FRR), which financed the fiscal deficit, was depleted in 2017. Since then, the central bank has had recourse to unconventional financing. From mid-November 2017 to April 2019, it raised $55 billion, equivalent to 32% of GDP in 2018.

In the medium term, economic growth is forecast to remain relatively stable, at 2.2% in 2020 and 1.8% in 2021. The authorities have an ambitious plan of structural reforms with a view to streamline business regulation, improve governance and transparency, reform the pension system, and modernize the financial sector.

This plan is based on actions already taken to improve the business climate, including opening sea and air freight to the private sector. The country’s low external debt and substantial foreign exchange reserves should enable it to weather any shocks and implement its reform program without sacrificing social programs. External debt remains negligible (less than 2% of GDP), but domestic debt (excluding guarantees) rose from 7.2% of GDP in 2015 to more than 26% in 2018.

The Algerian economy will continue to be dependent on and vulnerable to oil and gas prices (96% of export receipts in 2017). The rise in oil prices since 2018 (to around $70) will not enable Algeria to balance its budget (according to a study by the IMF, Algeria would need an oil price of $90 a barrel). A further fall in oil prices cannot be ruled out given the trend increase in US production. Official foreign exchange reserves fell from $114.1 billion (22.5 months of imports) at the end of 2016 to $79.8 billion (16 months) at the end of 2018. In 2019 and 2020, economic activity will be curbed by the sharp fall in public investment spending and by political uncertainty. The main challenge in the short term is to continue to maintain price stability and deal with inflationary pressures in an environment of substantial and persistent surplus liquidity.

Last updated: April 2020


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