Panorama econòmic

Economic indicators

The Algerian economy is mainly driven by hydrocarbons and public investment, with the former accounting for roughly 40% of GDP, 90% of exports and one-third of fiscal revenues. After accelerating to 4.1% in 2023, Algeria’s economic growth remained strong in 2024 (+3.8%), driven by non-extractive sectors and dynamic investment. Non-extractive GDP growth was broad-based, supported by resilient agricultural output. However, extractive GDP remained flat due to a reduced crude oil production quota in January and weaker European gas demand. For 2025 and 2026, GDP growth is forecasted to decelerate marginally to 3% and 2.5%, respectively. As hydrocarbon production slows, financing constraints limit budget spending, while structural bottlenecks hinder private sector growth (IMF).

In recent years, continued large fiscal and external current account deficits have reduced policy space as public debt increased significantly and international reserves declined. After narrowing to 2.3% of GDP in 2023, Algeria’s current account reached balance in H1-2024 due to declining export prices and volumes, while imports remained high, driven by investment. Foreign exchange reserves rose slightly, covering about 16.2 months of imports by the end of September 2024. The fiscal deficit, which stood at 5.2% of GDP in 2023, widened further, driven by lower hydrocarbon revenues and rising expenditures, including the final phase of public sector wage increases. The deficit was mainly financed through oil savings (EU Commission). Meanwhile, the debt-to-GDP ratio decreased to an estimated 45.7% last year (from 48.6% in 2023) but is expected to follow an upward trend over the forecast horizon, reaching 53.9% by 2026 IMF). Inflation slowed to 4.3% year-on-year in the first nine months of 2024, driven by stabilizing fresh food prices. Inflation had been rising since 2021, peaking at 9.3% in 2022 and stabilizing in 2023. Food price inflation, particularly for fresh items, hit vulnerable populations hard, as food makes up over half of expenditures for the bottom 40%. However, prices for fruits, vegetables, meat, and fish began to decline in mid-2023, helped by resilient agriculture and meat imports. This, along with a stable exchange rate and moderating import prices, contributed to the overall inflation slowdown. Monetary policy remains accommodative, with accelerated growth in the money supply and increased credit to the private sector.

Unemployment rates returned to pre-pandemic levels in 2023 (latest data available). According to International Labor Organization (ILO) estimates, the overall unemployment rate dropped to 12.3% (-0.2 pp), female unemployment fell to 21.5% (-0.3 pp), and youth unemployment decreased to 31.3% (-0.7 pp). Algeria has a low GDP per capita, estimated at USD 18,343 in 2024 by the IMF (PPP). There are also big differences between living conditions in cities and rural areas, and instability caused by radical groups on Algeria's borders remains a risk factor.

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