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Economic and political overview

Economic Overview

The Algerian economy is mainly driven by hydrocarbons and public investment, with the former accounting for roughly 40% of GDP, 90% of exports and one-third of fiscal revenues. After accelerating to 4.1% in 2023, Algeria’s economic growth remained strong in 2024 (+3.8%), driven by non-extractive sectors and dynamic investment. Non-extractive GDP growth was broad-based, supported by resilient agricultural output. However, extractive GDP remained flat due to a reduced crude oil production quota in January and weaker European gas demand. For 2025 and 2026, GDP growth is forecasted to decelerate marginally to 3% and 2.5%, respectively. As hydrocarbon production slows, financing constraints limit budget spending, while structural bottlenecks hinder private sector growth (IMF).

In recent years, continued large fiscal and external current account deficits have reduced policy space as public debt increased significantly and international reserves declined. After narrowing to 2.3% of GDP in 2023, Algeria’s current account reached balance in H1-2024 due to declining export prices and volumes, while imports remained high, driven by investment. Foreign exchange reserves rose slightly, covering about 16.2 months of imports by the end of September 2024. The fiscal deficit, which stood at 5.2% of GDP in 2023, widened further, driven by lower hydrocarbon revenues and rising expenditures, including the final phase of public sector wage increases. The deficit was mainly financed through oil savings (EU Commission). Meanwhile, the debt-to-GDP ratio decreased to an estimated 45.7% last year (from 48.6% in 2023) but is expected to follow an upward trend over the forecast horizon, reaching 53.9% by 2026 IMF). Inflation slowed to 4.3% year-on-year in the first nine months of 2024, driven by stabilizing fresh food prices. Inflation had been rising since 2021, peaking at 9.3% in 2022 and stabilizing in 2023. Food price inflation, particularly for fresh items, hit vulnerable populations hard, as food makes up over half of expenditures for the bottom 40%. However, prices for fruits, vegetables, meat, and fish began to decline in mid-2023, helped by resilient agriculture and meat imports. This, along with a stable exchange rate and moderating import prices, contributed to the overall inflation slowdown. Monetary policy remains accommodative, with accelerated growth in the money supply and increased credit to the private sector.

Unemployment rates returned to pre-pandemic levels in 2023 (latest data available). According to International Labor Organization (ILO) estimates, the overall unemployment rate dropped to 12.3% (-0.2 pp), female unemployment fell to 21.5% (-0.3 pp), and youth unemployment decreased to 31.3% (-0.7 pp). Algeria has a low GDP per capita, estimated at USD 18,343 in 2024 by the IMF (PPP). There are also big differences between living conditions in cities and rural areas, and instability caused by radical groups on Algeria's borders remains a risk factor.

 
Main Indicators 2024 (E)2025 (E)2026 (E)2027 (E)2028 (E)
GDP (billions USD) 264.91268.89269.44274.52279.98
GDP (Constant Prices, Annual % Change) 3.53.53.02.82.8
GDP per Capita (USD) 5,6825,6915,6315,6695,713
General Government Gross Debt (in % of GDP) 46.257.867.073.577.8
Inflation Rate (%) 4.03.73.63.43.3
Current Account (billions USD) -3.63-10.50-12.37-11.51-10.98
Current Account (in % of GDP) -1.4-3.9-4.6-4.2-3.9

Source: IMF – World Economic Outlook Database , Latest data available

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Agriculture accounts for 13.1% of Algeria’s GDP and employs 9% of the workforce (World Bank, latest data available). The main crops are wheat, barley, oats, citrus, wine grapes, olives, tobacco and dates. Algeria also produces a large quantity of cork and is an important livestock farmer. The country heavily depends on cereal grain imports, with soft (common, milling) wheat being the primary staple to meet consumption needs. In the 2023/24 season, cereal imports remained high due to below-average domestic production, which was impacted by dry weather conditions. In late 2023, the government introduced the “Strategic plan for the development of cereal production in Algeria 2023-2028”, aimed at developing the soft wheat, maize, sugar and oilseeds sectors to reduce the annual food import bill. National wheat production was anticipated at 3 million tonnes in the 2024/25 season, that of barley at 1 million (USDA).

The secondary sector represents 37.8% of GDP, employing 31% of the active population. The oil and gas sector accounts for most of the federal income and almost all of its export income (it represents over 90% of total exports). Algeria is among the top ten largest gas exporters in the world, it ranks 16th in oil reserves and 10th in confirmed gas reserves. The ores mined in large quantities are iron, lead, phosphate, uranium, zinc, salt and coal. The main activities of the manufacturing sector are industrial food processing, textile and chemical products, metals and construction materials. The manufacturing sector as a whole accounts for 9% of GDP (World Bank). Figures from the Ministry of Industry show that in the first three quarters of 2024, the public industrial sector recorded a growth rate of over 3.3% compared to the previous year.

The tertiary sector contributes to 45.6% of the GDP and employs 60% of the workforce. Algeria's banking sector is dominated by public banks, which suffer from high levels of non-performing loans to state-owned enterprises. Of the 20 banks operating in Algeria, six state-run banks retain the lion’s share of the market. With over 1,600 km of Mediterranean coastline, important cultural and historical sites, and the striking desert landscapes of the Sahara, Algeria has long held considerable potential for tourism. Nevertheless, the sector still accounts for a small part of GDP.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 9.34 30.80 59.87
Value Added (in % of GDP) 13.96 36.20 46.79
Value Added (Annual % Change) 5.30 1.52 4.62

Source: World Bank - Latest available data.

 
Monetary Indicators 20202021202220232024
Algerian Dinar (DZD) - Average Annual Exchange Rate For 1 USD 126.78135.06141.99135.84134.05

Source: World Bank - Latest available data.

 

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Foreign Trade

Algeria has an open economy in which foreign trade represents 44% of GDP (World Bank).  Natural gas and petroleum products account for nearly all exports: in 2023, hydrocarbons covered 90.8% of the total volume of exports
Algeria's non-hydrocarbon exports are dominated by four categories: semi-finished products, foodstuffs, electricity, and raw materials. Non-hydrocarbon exports fell to USD 5.05 billion in 2023, down from USD 5.9 billion in the previous fiscal year. According to the Bank of Algeria, this decline amounts to USD 919 million, or –15.4%. The largest share belongs to semi-finished products, particularly fertilizers, accounting for 78.6% of non-hydrocarbon exports, with a value of USD 3.97 billion in 2023. Food exports, representing 8.5% of non-hydrocarbon exports, surged from USD 269 million in 2022 to USD 428 million in 2023, a 59.1% increase (+USD 159 million), driven mainly by sugar. As per imports, the main product groups were food products (23.1%), industrial equipment (23%), semi-finished products (22.6%), and consumer goods (15% - data Bank of Algeria).

Data from the French Ministry of the Economy show that France was the third-largest customer of Algeria in 2022 (latest data available), accounting for 10.5% of the total, behind Italy (32.3%) and Spain (12%); whereas China was the top supplier with a market share of 18.6%, followed by France (14%) and Italy (7.7%). To boost its foreign trade, Algeria signed several trade agreements, as well as ratifying the Agreement on the African Continental Free Trade Area (AfCFTA) in 2019 in Accra, Ghana. The agreement allows interested states to benefit from the progressive elimination of tariff barriers for a period of five years from its entry into force in July 2020. The agreement aims to free African states from dependence on the extraction of raw materials and promote inter-African trade.

While the trade balance was historically positive, the surplus has vanished completely since late 2012 and the country has had a trade deficit since 2014. This reduction was due to a sharp fall in hydrocarbon exports. Incomes have also decreased drastically with the fall of oil prices. Nevertheless, such a trend reversed in 2021 thanks to the uptick in energy prices and it improved further in 2022-23 as Algeria benefited from the consequences of the EU sanctions towards Russia, which led to an increase in European hydrocarbon imports from Algeria. Data from the World Bank shows that the country’s trade balance was positive by an estimated 3.6% of GDP in 2023. In the same year, exports of goods totalled USD 51.8 billion (-21.1% y-o-y due to lower hydrocarbon prices); whereas imports grew by +7.6%, at USD 41.8 billion. In terms of services, the country exported the equivalent of USD 3.6 billion and imported USD 8.5 billion (data WTO). According to preliminary figures from the ONS, in the first semester of 2024, import volumes increased at a much higher pace than those of exports (+14.4% and +0.8%, respectively). The decline in hydrocarbon prices (-5.5%) and non-hydrocarbon prices (-10.3%) led to an overall 6.0% drop in export prices in the same period. Meanwhile, import prices also fell by 6.9%.

 
Foreign Trade Values 20202021202220232024
Imports of Goods (million USD) 35,54737,46638,86842,96246,100
Exports of Goods (million USD) 21,93238,63765,71855,55549,580
Imports of Services (million USD) 7,1496,4207,3047,7228,350
Exports of Services (million USD) 2,9373,1553,4743,7934,751

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20202021202220232024
Foreign Trade (in % of GDP) 40.446.851.243.740.1
Trade Balance (million USD) -12,9921,23326,99912,7023,501
Trade Balance (Including Service) (million USD) -17,445-2,44122,6308,361-1,414
Imports of Goods and Services (Annual % Change) -16.0-4.5-0.216.111.9
Exports of Goods and Services (Annual % Change) -12.211.5-0.13.1-2.4
Imports of Goods and Services (in % of GDP) 24.923.420.419.920.3
Exports of Goods and Services (in % of GDP) 15.523.430.823.819.9

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20252026 (e)2027 (e)2028 (e)2029 (e)
Volume of exports of goods and services (Annual % change) 2.02.92.92.70.7
Volume of imports of goods and services (Annual % change) 2.32.24.24.83.1

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Algeria is a member of the following international economic organisations: IMF, Arab Bank for Economic Development in Africa (ABEDA), Arab Fund for Economic and Social Development (AFESD), ICC, Arab Monetary Fund (AMF), G-15, G-24, G-77, WTO (observer), Arab League, among others. For the full list of economic and other international organisations in which participates Algeria click here. International organisation membership of Algeria is also outlined here.
Free Trade Agreements
The complete and up-to-date list of Free Trade Agreements signed by Algeria can be consulted here.
 
 

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Political Outline

Current Political Leaders
President-elect: Abdelmadjid Tebboune (since 19 December 2019)
Prime Minister: Sifi Ghrieb (since 28 August 2025)
Next Election Dates
Presidential: 2029
Council of the Nation: 2028
National People's Assembly: June 2026
Main Political Parties

Following liberalisation of the electoral law in 1997, dozens of political parties entered the parliamentary sphere. Still, most political power is concentrated in the President-backed National Liberation Front (FLN).

  • National Liberation Front (FLN): left-wing, secures about half of parliamentary seats; previously the only legally permitted party
  • Democratic National Rally (RND): centrist, liberal; initially created by the military as an alternative party, but still remains closely aligned to the FLN
  • Future Front (FM): centrist, nationalist
  • National Construction Movement (Binaa): Islamic democracy, Algerian nationalism

The main opposition parties include:

  • Movement of the Society for Peace (MSP): Sunni Islamism, Islamic democracy, aligned with the international Muslim Brotherhood
  • Voice of the People Party (PVP): led by Lamine Osmanie, a former member of the Algerian National Front
  • Justice and Development Front (FJD): right-wing, inspired by the Turkish Justice and Development Party (AKP).
Executive Power
The President of the Republic is the Head of State. He is directly elected by direct universal suffrage by absolute majority in two rounds if needed for a 5-year term (renewable once). He appoints the Prime Minister after consultation with the majority party in the Parliament and the Government at the suggestion of the Prime Minister. The Prime Minister sets the amount of the State's expenses and revenue and prepares some bills.
Legislative Power
Parliament is bicameral and composed of the Council of the Nation (Majlis al-Umma) and the National Popular Assembly (al-Majlis al-Sha'abi al-Watani). The Council (upper house) has 174 seats, 116 members are indirectly elected in secret ballot (2/3) and 58 are appointed by the President of the Republic (1/3). Its members serve a six-year term with one-half of the membership renewed every 3 years. The Assembly (lower house) has 407 members directly elected by the population to serve 5-year terms, of which 8 are elected among Algerians living abroad.
 

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