Algeria Economic Outlook

November 27, 2018

Growth was feeble in the second quarter after an already weak first quarter showing, chiefly on the back of a marked contraction in the oil sector and slowing industrial production. However, growth should increase in H2 thanks to higher fiscal spending and a ramp-up in oil-sector investment from Sonatrach, with several gas field expansions coming online in the period. Nevertheless, President Bouteflika’s likely bid for a fifth term in next year’s elections is hampering progress on crucial economic reforms, which bodes poorly for Algeria’s non-oil sector going forward.

Algeria Economic Growth

Economic momentum next year should be supported by a new energy law expected for H1 2019, which will likely buoy FDI inflows, coupled with Sonatrach’s large scale investment plan buttressing hydrocarbon output—notably natural gas. A weak fiscal position, high youth unemployment and a lack of economic reforms, however, pose key downside risks to the outlook. FocusEconomics panelists expect GDP to grow 2.6% in 2019, which is unchanged from last month’s forecast, and 2.3% in 2020.

Algeria Economy Data

	2013	2014	2015	2016	2017
Population (million)	38.3	39.1	40.0	40.8	41.5
GDP per capita (USD)	5,459	5,465	4,163	3,903	4,104
GDP (USD bn)	209	214	166	159	170
Economic Growth (GDP, annual variation in %)	2.8	3.8	3.7	3.3	1.6
Consumption (annual variation in %)	3.4	3.2	3.6	2.6	-
Investment (annual variation in %)	8.6	6.4	5.7	3.5	-
Industrial Production (annual variation in %)	2.2	-1.4	0.6	1.5	2.3
Unemployment Rate	9.8	10.6	11.2	10.5	11.7
Fiscal Balance (% of GDP)	-0.9	-8.0	-16.9	-13.5	-
Public Debt (% of GDP)	7.1	7.2	14.9	19.6	-
Money (annual variation in %)	11.6	12.9	11.7	3.5	-
Inflation Rate (CPI, annual variation in %)	3.3	2.9	4.8	6.4	5.6
Policy Interest Rate (%)	4.00	4.00	4.00	3.50	3.75
Exchange Rate (vs USD)	78.42	87.92	107.1	110.4	114.8
Exchange Rate (vs USD, aop)	79.61	80.60	100.4	109.4	110.9
Current Account (% of GDP)	0.6	-4.3	-16.4	-16.5	-12.9
Current Account Balance (USD bn)	1.2	-9.3	-27.3	-26.2	-22.0
Trade Balance (USD billion)	9.4	0.5	-18.1	-20.1	-14.3
Exports (USD billion)	64.4	60.1	34.6	29.3	34.4
Imports (USD billion)	55.0	59.7	52.7	49.4	48.7
Exports (annual variation in %)	-10.3	-6.6	-42.5	-15.2	17.5
Imports (annual variation in %)	13.8	8.5	-11.8	-6.1	-1.5
International Reserves (USD)	195	180	145	115	97.9
External Debt (% of GDP)	2.5	2.6	2.8	3.4	-

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Algeria Facts

	Value	Change	Date
Exchange Rate	118.8	-0.11 %	Dec 12

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