Hydrocarbons remain the mainstay of Algeria’s economy, although following the drop in oil prices since mid-2014, the government is hastening efforts to encourage investment in other sectors, with a particular focus on industry and agriculture. While foreign reserve and government debt levels are under pressure, both appear set to remain reasonably comfortable over the near future.
- Economy: Looking To Rebalance – Amid slowing oil production and exports, rises in government spending in recent years have led to the emergence of large fiscal and current account deficits however, these are expected to fall as spending cuts, efforts to widen the tax base and diversification measures all start to have an effect.
- Industry: A Growing Contribution – Despite the availability of cheap energy and a range of natural resources, non-hydrocarbons industry in Algeria has been slow to develop. However, amid efforts by the government to prioritise the sector as part of diversification plans, there are signs it is beginning to take off, supported by investment incentives and the planned development of 50 new industrial zones.
- Banking: Moving Forward – The six state-owned and 14 private banks that dominate Algeria’s financial market are seeking new revenue sources by expanding their product lines and working to boost traditionally low penetration and intermediation rates. Credit to the economy reached nearly 53.7% of nonhydrocarbons GDP in 2015, up 1.9 percentage points on 2014.
- Health: Rising Spending – Algeria has made significant strides to improve access to quality medical care and tackle communicable diseases. Indeed, years of accumulated oil revenues have enabled the government to fund the health care system generously and invest heavily in clinics and hospitals.
- Agriculture: Private Investment Drive – The development of the agricultural sector is an integral part of the Algerian government’s push for economic diversification. Promoting private sector investment and self-sufficiency in an attempt to lower the country’s import bill were some of the more prevalent issues concerning the agricultural sector in 2016.