Algeria Economic Outlook
GDP rose 3.2% in 2022. This figure was above the 10-year average of 1.9% but below slightly last year’s print. Compared to the prior year, the hydrocarbons sector weakened dramatically in 2022, contracting 0.6% (2021: +10.5%). The decline was largely due to a fall in LNG output linked to the closure of the Maghreb pipeline in late 2021. Meanwhile, the non-hydrocarbons sector grew 4.3% (2021: +2.3%). Looking at expenditure components, private spending, fixed investment and exports slowed, while public spending accelerated. Turning to 2023, oil output expanded 3.1% year on year in January–April (2022: 11.9%). In the same period, inflation remained near double-digits, likely crimping private spending. Meanwhile, a recent drought should knock wheat yields to around 20% below the five-year average this year, likely hitting agricultural output and stoking inflation.
Inflation fell to 9.6% in April from 10.2% in March. Price pressures continued to be fanned by red-hot food prices. Inflation is seen cooling later in 2023 thanks to government subsidies and a tougher base effect. Key factors to watch include the recent drought’s effects on agriculture and the fate of the Ukraine grain corridor.