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Spur in investment, especially in large industrial projects, boosted Algeria’s economic activity in the first quarter of 2023 and should continue to support growth between 2023 and 2025, stated the World Bank (WB) in its latest report on the Algerian economy.
Spur in investment, especially in large industrial projects, boosted Algeria’s economic activity in the first quarter of 2023 and should continue to support growth between 2023 and 2025, stated the World Bank (WB) in its latest report on the Algerian economy.
Algeria has the potential to diversify its economy, reduce its dependence on imports, and increase its non-hydrocarbon exports while creating sustainable jobs in the private sector, stated Kamel Braham, World Bank Country Representative in Algeria.
Algeria has put in place short-term macroeconomic buffers and that helped the accumulation of foreign exchange reserves and budgetary savings. The good performance of the hydrocarbon sector and the positive momentum of investments should continue, mentioned Cyril Desbridges, the World Bank’s Senior Economist for Algeria.
The WB stressed that Algeria’s economy returned in 2022 to its pre-pandemic level, with a recovery continuing in the first half of 2023. Algeria’s growth is also expected to return to its pre-COVID trajectory by 2024, driven in particular by the hydrocarbon and agriculture sectors.
On non-hydrocarbon activity, the report estimated that gross domestic product (GDP) growth is expected to be stronger in 2024 and 2025, thanks to the recovery of agricultural production and crude oil production following the OPEC quota recovery”, emphasizing in this regard investment growth which should remain “robust” and continue to support industrial activity, notably in the private sector.
According to World Bank projections, inflation is projected to decline gradually in 2024 and 2025 with prudent monetary and fiscal policies and if rainfall recovers, promoting robust agricultural production.
As regards the trade balance, the World Bank expects it to remain “positive” throughout 2023, 2024, and 2025, while also protecting the continued accumulation of foreign reserves over these three years.
The authorities have built up more foreign exchange reserves and oil savings, strengthening the medium-term resilience of the Algerian economy, while rising gas prices and higher oil prices in the second quarter of 2023 could prolong the hydrocarbon bonanza, the paper reads.
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The United States and Italy have been investing heavily in Algeria, taking over France’s historical position as the largest investor in the country. European investments have recently decreased in favour of greater interest from Gulf investors. On a country level, the United States, Italy, France, and Spain are the leading investors, according to the latest investment climate statement for Algeria from the US State Department Industry, construction, and transport are the sectors that have received the most FDI over the 2022-2023 period. The total number of investments registered for that period with the National Agency for Investment Development (ANDI) amounted to 3,120 projects for an estimated value of DZD 1,731 billion.
