Algeria: Economic and Political Overview
In this page: Economic Outline | Political Outline
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 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 240.06 | 260.13 | 264.27 | 270.14 | 275.08 |
| GDP (Constant Prices, Annual % Change) | 4.1 | 3.8 | 3.0 | 2.5 | 2.1 |
| GDP per Capita (USD) | 5,222 | 5,579 | 5,593 | 5,646 | 5,681 |
| General Government Gross Debt (in % of GDP) | 48.6 | 45.7 | 50.4 | 53.9 | 57.1 |
| Inflation Rate (%) | 9.3 | 5.3 | 5.2 | 4.5 | 4.7 |
| Unemployment Rate (% of the Labour Force) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Current Account (billions USD) | 5.98 | 3.34 | -2.15 | -4.14 | -5.21 |
| Current Account (in % of GDP) | 2.5 | 1.3 | -0.8 | -1.5 | -1.9 |
Source: IMF – World Economic Outlook Database, Latest data available.
Note : (E) Estimated data
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) | 9.3 | 30.8 | 59.9 |
| Value Added (in % of GDP) | 13.1 | 37.8 | 45.6 |
| Value Added (Annual % Change) | 2.9 | 3.9 | 3.8 |
Source: World Bank, Latest data available.
Find more information about your business sector on our service Market Reports.
The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
See the country risk analysis provided by Coface.
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).
The main opposition parties include:
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: February 2025
Reserved for registered profiles