Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

The Algerian economy is mainly driven by hydrocarbons and public investment, with the former accounting for 40% of GDP, 94% of exports and one-third of fiscal revenues. In 2022, the country benefited from high energy prices and the increased demand from Europe that followed the EU sanctions against Russia: overall, the IMF estimated growth at 4.7%. In the same year, non-hydrocarbon GDP growth was projected to accelerate to 3.2%, from 2.1% one year earlier (IMF), despite the erosion of household purchasing power caused by food price-driven inflation. For 2023, GDP growth is forecast at 2.6% amid lower investment (especially in the private sector), with a further deceleration for 2024 (2% according to the 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 (IMF). The situation improved only partially in 2022, as higher hydrocarbon revenues contributed offsetting the government's operational and capital expenditure and the large share of social transfers (estimated to account for around 9.5% of GDP according to Coface). Nevertheless, such a strong dependence on oil prices underlines the need for economic diversification, especially toward petrochemicals, gas and agricultural products that have high export potential. After soaring following the COVID-19 crisis, the public debt-to-GDP ratio decreased to 62.7% in 2022, but it is expected to follow an upward trend over the forecast horizon, at 70.3% this year and 75.6% in 2024 (IMF). Overall, Algeria’s external debt level is very low (less than 3% of GDP) but could increase in the event of adverse shocks or if fiscal deficits widen. Foreign exchange reserves have been falling since 2013, decreasing from USD 195 billion to USD 53.5 billion in September 2022. Inflationary pressures have intensified due to higher international food prices and an episode of drought: the annual average inflation rate reached 9.7% in 2022, a level not seen in 25 years. The central bank has taken actions to control price pressures, but monetary policy remained accommodative, and the IMF expects inflation to remain high in 2023 (8.7%) and 2024 (9.3%). The new Government Action Plan comprises a wide range of reforms to support the transition towards a more diversified and sustainable economy and bolster governance and social cohesion, for example focusing on the mining sector (iron, phosphate), in accordance with the 2021-2023 national mining programme. Moreover, the country is looking for ways to reduce its dependence on gas for power generation by investing in solar energy.

According to IMF estimates, unemployment hit 13.7% of the population in 2022. As per the World Bank, unemployment is highest among youth, women and graduates due to skills mismatch in the labour market. With a youth unemployment rate above 30%, in 2022 Algerian President Abdelmadjid Tebboune announced a new unemployment benefit for first-time jobseekers aged 19 to 40. 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.

Foreign Trade

Algeria has an open economy in which foreign trade represents 53% of GDP (World Bank). Natural gas and petroleum products account for nearly all exports: in 2021, hydrocarbons represented 91% of the total volume of exports (39% natural gas, 37% crude oil and 17% motor fuels). Three groups of goods accounted for almost three-quarters of the total: industrial capital goods (26.7%); foodstuffs (23.5% - mainly cereal and dairy products); and semi-finished goods (23.2% - mainly steel products – Data French Ministry of the Economy). According to the National Centre of the Trade Register (CNRC), in 2022 the number of exporters registered in the Trade Register rose to 5,498 operators against 4,749 at the end of 2021.

The latest data from Comtrade shows that Italy is the top destination for Algerian exports (16%), followed by France, Spain, the United States and Brazil. China is by far the main supplier of goods in Algeria (18.1% of all imports), followed by France, Italy, Germany and Spain. Algeria is the EU's 28th biggest trade partner, representing 0.7% of the EU’s total trade in goods in 2020; whereas the EU is Algeria's biggest trade partner and accounts for the majority of Algeria’s international trade (46.7% - Eurostat, latest data available). Algeria ratified 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 2015. This reduction was due to a sharp fall in hydrocarbon exports, which represent nearly all 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 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 0.2% of GDP in 2021. In the same year, exports of goods increased by almost 70% year-on-year, reaching USD 36.7 billion; whereas imports grew at a much slower pace (+2.5%, at USD 36 billion). In terms of services, the country exported the equivalent of USD 3 billion and imported USD 6.6 billion (data WTO).

COVID-19 Country Response

COVID-19 epidemic evolution

To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Algeria, please visit the website DZ-Covid19 (in Arabic), which includes data on the geographical distribution of the epidemic in the country. Furthermore, daily reports can be accessed on the website of the Ministry of Health.
For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures

To find out about the latest public health situation in Algeria and the current sanitary measures in vigour, please visit the official COVID-19 portal of the Ministry of Health (in French and Arabic).
Further information can be sourced on the website of the Ministry of Health (in French and Arabic).

Travel restrictions

The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.

Import & export restrictions

For the up-to-date information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the website of the Algerian Customs Authority.
For further information on the temporary trade measures adopted by Algeria, please consult the section dedicated to Algeria on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

For the information on the economic recovery scheme put in place by the Algerian government to address the impact of the COVID-19 pandemic on the national economy, please visit the website of the Ministry of Finance (in French and Arabic). For a summary in English of the specific economic and fiscal measures adopted by the government, consult the dedicated page from KPMG.
For updates on the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Algerian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Algeria in the IMF’s Policy Tracker platform.

Support plan for businesses

For an overview of the fiscal measures taken by the Algerian government to help businesses to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult dedicated page on the Ministry of Finance website (in French). The Large Companies Department (DGE) provides information about the economic measures that apply to the companies that fall within its scope of activity.
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters

For the updated information on specific programs in support of Algerian exporting companies put in place by the national government following the COVID-19 epidemic, if applicable, please consult the website of the national Ministry of Commerce (in French and Arabic).