Algeria

Algeria’s business environment has undergone profound changes since the 1990s. The country’s commitment to the market economy attributes great importance to the private sector. Algeria recorded a sustained growth rate, particularly during the 2000s (IMF, 2013a). In 1994, the value added by the private sector was only 46.5% of the national total, but this proportion has been rising. In 1998, the added value created by the private sector contributed over half of the national total (Gharbi, 2011). Although unemployment dropped from a rate of nearly 30% in 2000 to 10% in 2012, it still disproportionately affects young people (21.5%) and women (19.1%).

In 2012, the Algerian economy grew by 2.5%, up slightly from 2.4% in 2011. Excluding hydrocarbons, growth has been estimated at 5.8% (up from 5.7% in 2011). Inflation is increasing and is estimated at 8.9% (up from 4.49% in 2011). Despite the financial authorities’ good performance, thanks to modernisation reforms, the budget deficit widened to 3.3% of GDP in 2012 (as against 1.3% in 2011) due to the continuation of the expansionary fiscal policy initiated in 2011 to meet strong social demands in terms of purchasing power, jobs and housing. The oil and gas sector is the country’s main source of revenues, having generated about 70% of total budget receipts. The economy is projected to grow by 3.2% in 2013 and by 4.0 % in 2014.

The Algerian economy grew by 2.6% in 2011. The rate of inflation was 3.9% and the budget deficit 3% of gross domestic product (GDP). The current-account surplus is estimated at 9.3% of GDP and at the end of December 2011, official reserves were put at USD 182.2 billion. If hydrocarbons are excluded, growth has been estimated at 4.8%. Production from the oil and gas sector in terms of volume, continues to decline, dropping from 43.2 million tonnes to 32 million tonnes between 2007 and 2011. Nevertheless, the sector accounted for 98% of the total volume of exports in 2011 and 70% of budgetary receipts, or USD 71.4 billion. The agricultural sector and services recorded growth of 10% and 5.3%, respectively. Fiscal policy remained expansionist and made it possible to maintain the pace of public investment and to contain the strong demand for jobs and housing. Growth of 3.1% is expected in 2012, rising to 4.2% in 2013.

The oil and gas sector represents the principal source of growth, even though GDP in the non-hydrocarbon sector has also done well in the past several years. Besides oil and gas, it has been the completion and acceleration of major public investment projects and household consumption that drove growth in 2010. However, a growth rate of 3.5% in 2010 remains modest considering the potential of the Algerian economy and is insufficient to bring down unemployment and ease the housing crisis. Growth excluding hydrocarbons reached 5.5% in 2010, below that of the two preceding years (9.3% in 2009 and 6.1% in 2008). Medium-term growth prospects are encouraging, but are subject to variations in the price of oil and gas. Growth should be sustained in the short term by the effects on the oil and gas sectors of increased growth in the world economy resulting in an increase in oil prices favourable to Algeria; major public spending; and an acceleration of the programme of public investment under the 2010-14 plan. Inflation in 2010 stood lower than the relatively high levels experienced the two previous years (4.8% in 2008 and 5.7% in 2009). The rise in prices, in particular in the second quarter, was due mainly to soaring world prices of the principal consumer food products.

Despite strong growth of nearly 9% in the non-oil/gas sectors, owing mainly to the excellent performance in the agricultural sector, which grew 17%, overall economic growth in 2009 was 2.2%, down 0.2 percentage points from 2008. ð“is moderate growth, which was not sufficient to ease unemployment and poverty in the country, was due to the drastic decline in government revenue from oil and gas exports, which are the country's main export products. ð“e expected upturn in global demand in 2010 and the consolidation of the public investment programme (PIP) through the 2010-14 plan is projected to increase growth to 3.9% in 2010 and 4.3% in 2011. Inflation, which was contained at 3.9% in 2008, increased markedly in 2009 to 5.7% as a result of the spiralling costs of fresh food products, which rose by 20% during the same period.

The situation for women in Algeria is difficult, largely as a result of the country’s history and the influence of Islamist movements over the past 20 years. Conditions for women are closely linked to the provisions of the 1984 Family Code, based on Islamic law.

SINCE 2000 ALGERIA HAS CONSOLIDATED its economic growth, and the reforms undertaken are beginning to bear fruit. Growth in 2008 was 3.3 per cent and inflation 4.4 per cent. Having appreciated since 2007, the exchange rate of the dinar (DZD) remained close to its equilibrium value in 2008 (68 dinars to the US dollar [USD]), and unemployment stabilised at around 12 per cent of the active population. Strengthened by an average oil price of USD 99 per barrel in 2008, the Bank of Algeria built up foreign exchange reserves amounting to almost USD 142 billion. Following early repayments, total external debt fell to USD 460 million (0.27 of gross domestic product [GDP]), and internal public debt dropped by nearly 30 per cent. Weak growth of 0.2 per cent is expected in 2009, as a result of falling global demand and reduced prices of oil and gas.

Uranium exploration began in Algeria in 1969. The Precambrian shield of the Hoggar and its Tassilian sedimentary cover were considered to provide a geological environment favourable for uranium mineralisation. Initial exploration, carried out by means of ground radiometric surveys, found several radioactive anomalies (Timgaouine, Abankor and Tinef). In 1971, an aerial radiometric survey was performed over the entire country, an area of 2 380 000 km2. After evaluation of the data from that survey, several prospecting teams were involved in ground follow-up and in verifying anomalies. This led to the discovery of a large number of promising areas for further uranium exploration: Eglab, Ougarta, and southern Tassili (Tin-Seririne basin) where the Tahaggart deposit was discovered. Follow up of the aerial radiometric survey also led to identification of the Tamart-N-Iblis and Timouzeline sectors as areas for future uranium exploration. At the same time, the search for uranium entered a phase (1973-1981), which focused primarily on evaluation of the deposits already discovered. A second phase (1984-1987) was characterised by a marked slowdown in the search effort; however, investigations of the flanks of the known deposits and in neighbouring regions revealed other potential mineralised areas (e.g. Tesnou zone in the northwest and north Timgaouine). In Tin-Seririne basin (Tassili south of the Hoggar), geological mapping has resulted in characterisation of the distribution of uranium mineral deposits in the Paleozoic sedimentary sequences.

A FAVOURABLE INTERNATIONAL SITUATION and good control over macroeconomic aggregates have enabled Algeria to maintain respectable levels of economic growth since 2002; these remain beneath the country’s potential, however, particularly in non-hydrocarbon growth. The continued increase in revenue from hydrocarbons has allowed the country to achieve high investment rates and controlled wage increases, but unemployment remains high, especially amongst young people. The country has been able to discharge most of its external, public and multilateral debt thanks to prepayments. Compared to economies with a similar revenue level, the Algerian economy is still poorly diversified, and the contribution of the private sector to total GDP remains weak.

Algeria's economic growth has continued to be sustained mainly by the ongoing increase in the volume and prices of its oil and gas exports, which have enabled the country to improve its external position considerably. This positive international climate, along with agricultural growth above 2 per cent in 2004, has meant that Algeria’s GDP grew by 5.2 per cent in 2004 and the rate is expected to be 5.4 per cent in 2005. These positive results should continue as long as trade conditions remain favourable.

A GROWTH RATES OF 6.9 PER CENT in 2003 and 5.4 per cent 2004 confirm the country’s economic health and stability and underpin expectation of further substantial growth of around 4.5 per cent in 2005 and 2006. Algeria has reduced its debt ratio to 24.7 per cent, rebuilt official reserves to the equivalent of nearly two years of imports, still has a budget surplus (even taking into account its FRR revenue regulation fund) and has...

Oil And Natural Gas Dominate the economy, providing a third of GDP, 97 per cent of exports and two-thirds of the government income. The state-owned industrial sector is meanwhile inefficient and unemployment high, at nearly 30 per cent. Standards of living are falling...

Algeria: Current Account (percentage of GDP at current prices) appears in African Economic Outlook 2009.

Algeria: Demand Composition appears in African Economic Outlook 2009.

Algeria: GDP by Sector in 2007 (percentage) appears in African Economic Outlook 2009.

Algeria: Public Finances (percentage of GDP at current prices) appears in African Economic Outlook 2009.

Algeria: Real GDP Growth and Per Capita GDP (USD/PPP at current prices) appears in African Economic Outlook 2009.

Algeria: Part de l’encours de la dette extérieure dans le PIB et ratio du service de la dette sur les exportations (en pourcentage) appears in African Economic Outlook 2009.