Algerian authorities notably enacted an Investment Law (2022), a Banking and ALGERIA Key conditions and Monetary Law (2023), and a law to ease access to land for investors (2023). challenges Deepening these reforms is critical to re- new Algeria’s growth and jobs strategy Table 1 2023 Algeria’s economy is driven by the oil towards a more private sector-led eco- Population, million 45.6 and gas sector and public sector spend- nomic diversification model. GDP, current US$ billion 239.9 ing. Oil and natural gas accounted for 14 GDP per capita, current US$ 5260.2 percent of GDP, 86 percent of exports, a 5.5 National poverty rate and 47 percent of budget revenues be- International poverty rate ($2.15) a 0.5 tween 2019 and 2023. Recent developments a 4.0 Following the pandemic-induced reces- Lower middle-income poverty rate ($3.65) Gini index a 27.6 sion in 2020, Algeria’s economy recovered Economic activity remained robust in School enrollment, primary (% gross) b 108.8 rapidly, and economic output surpassed Q1-2024 (+3.8 percent y-o-y), as broad- b 77.1 its pre-pandemic level by 2022 helped by based growth in the non-extractive sectors Life expectancy at birth, years surging hydrocarbon prices and higher compensated for OPEC-mandated crude Total GHG emissions (mtCO2e) 286.5 European demand for Algerian gas. The oil production cuts. Strong private con- Source: WDI, Macro Poverty Outlook, and official data. current account deficit turned into a sur- sumption growth (+4.2 percent y-o-y) a/ Most recent value (2011). b/ WDI for School enrollment (2023); Life expectancy plus and the fiscal deficit narrowed in pulled the services sector (+ 4.3 percent y- (2022). 2022, but they both started to deteriorate o-y). Industrial growth was more moder- in 2023 amid declining global oil and gas ate because the demand from stronger in- prices, OPEC quota cuts, larger imports, vestment (+14.8 percent y-o-y) was largely Algeria’s growth remained dynamic, and and higher public spending. met through imports. inflation decelerated in early 2024, amid Significant improvements in living stan- Satellite data suggest that non-hydro- dards, education, and health took place carbon growth remained robust in OPEC quota reductions but resilient prior to the pandemic and inequality is rel- Q2-2024 and that agricultural output agricultural output, higher public spend- atively low, but estimated poverty remains growth was stable as more rainfall in the ing, and strong investment. Declining oil high for Algeria’s level of development. Eastern regions compensated for a drier and gas exports and revenues and higher The government responded to high infla- season in the West. tion in 2021-2023 and to persistent unem- The trade surplus decreased from US$6.3 public spending on wages, pension, and ployment challenges by increasing pub- billion in H1-2023 (2.8 percent of 2023 subsidies are expected to increase pres- lic sector wages and pensions, introduc- GDP) to US$3.4 billion in H1-2024 (1.5 per- sures on the fiscal and external balances. ing unemployment benefits, as well as ex- cent of 2023 GDP), as hydrocarbon prices Continued modernization of the public panding food subsidies. and exports moderated, and imports con- sector, improvements to the business en- Since the pandemic, the government has tinued to rebound. The higher imports also adopted policies to boost export were driven by machinery, equipment, vironment, and digitalization are critical and vehicles as investment grew and some diversification, private investment, dig- to diversify the economy and promote italization, and financial sector devel- car import restrictions were temporarily more private sector investment and jobs. opment. Over the past two years, the removed. The estimated current account FIGURE 1 Algeria / Real GDP and selected components, FIGURE 2 Algeria / Hydrocarbon and fertilizer export prices indices (2019=100) Index, 2019=100 Price in US$, indices (Q1-2019=100) 130 350 Imports Consumption 300 120 Natural gas Investment GDP Weighted price 250 110 Crude oil Fertilizer price 200 100 150 90 100 80 50 70 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024 Sources: Algerian authorities and World Bank staff estimates. Sources: Algerian authorities and World Bank staff estimates. MPO 1 Oct 24 was nearly balanced in H1-2024 down H1-2024 while credit growth remained current spending, the budget deficit would from a surplus of US$2.4 billion a year ear- moderate. The Central Bank has kept its stabilize in 2025 and narrow somewhat in lier. Official reserves as of end-2023 stood key interest rate unchanged at 3 percent 2026, in line with the consolidation plan in at 16 months of imports. since May 2020 and increased the reserve the medium-term budget framework. The After reaching 5.2 percent of GDP in requirements slightly in April 2023. public debt-to-GDP ratio would stabilize 2023, the budget deficit is expected to in 2024 as the government uses hydrocar- widen in 2024, driven by lower hydrocar- bon savings to finance the deficit but then bon revenues, higher public investment, increase to 59 percent of GDP by 2026 as and the third and last wave of public sec- Outlook they are exhausted. tor wage increases. Public debt remains Hydrocarbon price and market fluctua- relatively low and is almost completely GDP growth is expected to moderate in tions represent the most important risk for domestically owned with long-term ma- 2024 driven by lower oil production in line Algeria’s macroeconomic prospects. Re- turities and low interest rates. with Algeria’s OPEC quota and despite cent drought episodes and forest fires also Inflation decelerated to 4.1 percent over higher public spending. It would acceler- underscore Algeria’s vulnerability to cli- H1-2024, down from 9.3 percent in 2022 ate in 2025 as agricultural output fully re- mate change. Accelerating structural re- and 2023, driven by stabilizing fresh food covers, non-hydrocarbon dynamism con- forms to improve the business environ- prices, moderating import prices, and a tinues, and oil production rebounds. ment and diversify the economy are crit- stable exchange rate. As in many compara- The current account balance is expected to ical to spur more private sector-led ble countries, lower inflation—particular- post a modest deficit in 2024 and widen growth and job creation. Though hard ly in food prices—has likely improved in 2025-2026 due to moderating oil prices, to quantify without data, such policies household purchasing power, especially and higher imports driven by investment. would likely reduce poverty and vulnera- for the most vulnerable. Money supply After widening in 2024 due to lower hy- bility, both estimated to be relatively high growth decelerated through 2023 and drocarbon receipts, higher investment, and for the country’s income level. TABLE 2 Algeria / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023 2024e 2025f 2026f Real GDP growth, at constant market prices 3.8 3.6 4.1 3.1 3.8 3.3 Private consumption 1.6 3.5 3.8 3.6 3.4 3.2 Government consumption 1.2 2.8 2.6 2.4 2.2 2.0 Gross fixed capital investment 0.4 2.6 8.4 7.0 5.8 5.2 Exports, goods and services 11.5 0.2 3.1 -2.8 2.5 1.2 Imports, goods and services -4.5 -0.2 19.4 4.9 4.2 3.9 Real GDP growth, at constant factor prices 4.3 3.8 3.8 3.1 3.8 3.3 Agriculture -2.2 5.2 2.8 2.7 3.0 2.6 Industry 10.3 2.9 3.6 2.5 4.1 3.4 Services 1.9 4.1 4.2 3.7 3.8 3.3 Inflation (consumer price index) 7.2 9.3 9.3 4.0 4.9 4.4 Current account balance (% of GDP) -2.4 8.6 2.3 -1.2 -3.1 -4.2 Fiscal balance (% of GDP) -6.3 -3.0 -5.2 -9.8 -9.9 -8.7 Revenues (% of GDP) 26.2 29.7 32.9 29.9 28.4 27.4 Debt (% of GDP) 55.2 48.1 49.2 49.5 55.2 58.9 Primary balance (% of GDP) -5.7 -1.8 -3.9 -8.6 -8.6 -7.3 GHG emissions growth (mtCO2e) 3.1 2.3 2.6 2.1 2.7 2.4 Energy related GHG emissions (% of total) 52.9 54.0 55.1 56.1 57.1 58.0 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. MPO 2 Oct 24