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Algeria Rises to Become One of Africa’s Top Three Economic Powers

April 29, 2025

(3 Minutes Read)

With an estimated Gross Domestic Product (GDP) nearing USD 270 billion, Algeria is now firmly positioned among Africa’s top three largest economies. This affirmation comes from the International Monetary Fund (IMF) in its latest economic outlook, confirming earlier forecasts made by various analysts and institutions.

According to the IMF, Algeria’s GDP is projected to reach USD 268.89 billion in 2025, placing it behind only South Africa and Egypt on the continent, and ahead of traditionally strong economies such as Nigeria, Ethiopia, and Kenya. This significant advancement reflects the country’s successful strategy of economic transformation and resilience in the face of global economic uncertainty.

Several key factors have contributed to Algeria’s rise. Central among them is the government’s sustained push for economic diversification. Recognising the long-term risks of overreliance on hydrocarbons, Algerian policymakers have channelled substantial resources into expanding the industrial sector, upgrading infrastructure, and developing renewable energy sources. These efforts are beginning to yield tangible results.

At the same time, Algeria has made considerable strides in improving its investment climate. Reforms aimed at attracting foreign capital, easing regulatory bottlenecks, and promoting public-private partnerships have helped draw international investors to critical sectors, including manufacturing, agriculture, and energy.

One of the most promising developments has been the rapid growth of the renewable energy sector. With investments pouring into solar and wind projects, Algeria is gradually reducing its dependence on fossil fuels, aligning its economic strategy with global sustainability trends.

Moreover, macroeconomic stability is expected to improve. Inflation, which has been a persistent challenge in many emerging economies, is forecast to decline to 3.7% in 2025, contributing to a more stable financial environment. This is expected to bolster consumer and investor confidence alike.

Algeria’s progress has not gone unnoticed. International institutions, including the IMF and World Bank, have commended the country’s ability to maintain economic momentum despite a turbulent global landscape marked by inflation, geopolitical tensions, and post-pandemic recovery challenges.

However, sustaining this upward trajectory will require continued effort. Algeria must keep advancing its economic diversification agenda, investing in high-value sectors such as technology, manufacturing, and services. Long-term success will also hinge on deepening structural reforms, fostering innovation, and expanding access to education and training to build a competitive, knowledge-based economy.

In sum, Algeria’s emergence as the third-largest economy in Africa is both a milestone and a call to action. By building on its current momentum, the country has the opportunity to become not just a regional power but a global player in key strategic sectors.