The Report: Algeria 2013

Considerable oil and gas revenues have provided the Algerian government with sufficient funds to embark on generous public spending programmes in nearly all sectors, leading to improvements in many of the country’s headline indicators. Although hydrocarbons are likely to remain the backbone of the economy for the foreseeable future, with significant state involvement, efforts are being made to diversify the economy and support private sector growth. Since the country gained independence more than 50 years ago, Algeria’s economy has evolved significantly, with oil and gas production reinforcing high levels of state spending. Algeria has been following something of a contrary approach to much of the rest of the world over the past few years. Even as the global economy has struggled, Algeria has continued to sail along fairly smoothly. It has not seen the vertiginous growth rates of emerging markets elsewhere in the Middle East and Africa, but it has seen a steady increase in activity and, through prudential management, has built up its financial reserves to great effect. While the state maintains a heavy presence in the market, the 38m-person country’s fundamentals are very robust, and the capital expenditures and policy reforms being taken to help address its weaknesses offer significant scope for even higher growth in the years to come.