Algeria Economic Outlook
- Growth should be maintained in 2012 and 2013, driven by public investment, internal demand and oil prices.
- The main challenges lie in diversifying the economy and intensifying reform.
- The unemployment rate among young people is put at 21.5 %, as opposed to 10% for the active population at large.
Growth in Algeria is estimated to have reached 2.8 % in 2011 (4.8 % if oil and gas are excluded) and should pick up speed in 2012 and 2013, while inflation should stay at a moderate level. Oil and gas production is gradually dropping, from 43.2 million tonnes in 2007 to around 32 million tonnes in 2011.
Nevertheless, it accounts for 98% of exports by volume and 70% of tax revenues. The agricultural and services sectors recorded growth of 10% and 5.3% respectively in 2011. In 2012 there is sure to be a conspicuous intensification of political and economic reforms in response to social pressures.
The state of emergency in place since 1992 was recently lifted and new legislation passed, relating in particular to political activity and information. New measures were introduced to improve the business climate for small and medium-sized enterprises (SMEs), such as new ways of paying for imports, tax breaks for investment finance and treatment of bank debts. The revision of the public procurement code allowed for an increase in the national preference rate to 25%. Budgetary policy will remain expansionary, with a continuing rate of public investment in line with the five-year 2010-14 plan valued at USD 286 billion. The budget deficit is deepening rapidly but is still moderate.
The chief challenges that Algeria faces in the short and medium terms are the need to diversify the economy, strengthen political and economic reform, improve the business climate, reduce regional inequalities and create jobs. Overall unemployment is estimated at 10% but among the young aged between 15 and 24 the figure rises to 21.5 %. Existing employment programmes have been strengthened; in particular the aid scheme for integration into employment (DIAP) and it has been made easier for young entrepreneurs to obtain credit.
