Algeria Economic Outlook
The economy likely remained in a tough spot in the third quarter. Available data for the hydrocarbons sector—which accounts for roughly 19% of GDP—is mixed. In July–August, LNG production growth surpassed that of Q2. Similarly, natural gas output growth accelerated from Q2 to over 11% year on year in Q3. Less positively, the rate of decline in oil production more than doubled in Q3 from the prior three months. In the non-oil sector, meanwhile, momentum will have been downbeat; the year-on-year contraction in merchandise exports accelerated in July from Q2, suggesting faltering international demand. Moreover, inflation averaged above Q2’s level in Q3, hurting purchasing power. However, relatively low interest rates should have provided some support.
Inflation softened to 10.3% in September from August’s 11.1% on lower increases in prices for food and transport. Inflation is expected to average below 2023’s projected level in 2024; nevertheless, it will remain above the 10-year average of around 5%. Food price spikes due to extreme weather are an upside risk.