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Algeria

With a population of 40 million, vast hydrocarbon reserves and its proximity to Europe, Algeria has significant economic development potential.

But the future outlook is subject to increased uncertainties. In addition to the Covid-19 pandemic, Algeria will have to deal with the prolonged level of low oil prices. The ability of the economy to recover is undermined by the necessity to consolidate public finances and external accounts. Algeria is fundamentally a state-driven economy that runs large twin deficits. The fragile socio-political context since resignation of former President Bouteflika compounds to difficulties. But negligible external debt gives some room for manoeuvre even if the rapid erosion of fx reserves is a source of concern.

Furthermore, macroeconomic challenges have pushed the authorities to change their attitude towards foreign investors. Several reforms have been introduced since the beginning of 2020 with a view of improving the country’s attractiveness, in particular in the oil and gas sector as many years of under-investment and robust domestic energy consumption have affected the country’s ability to export hydrocarbon products. The task will be huge. But some decisions seem to move in the right direction.

ABOUT US Three teams of economists (OECD countries research, emerging economies and country risk, banking economics) make up BNP Paribas Economic Research Department.
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