Economic and Political Overview

flag Algeria Algeria: Economic and Political Overview

In this page: Economic Outline | Political Outline | COVID-19 Country Response


Economic Outline

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.

Main Indicators 202020212022 (E)2023 (E)2024 (E)
GDP (billions USD) 145.66163.14195.42206.01210.86
GDP (Constant Prices, Annual % Change) -
GDP per Capita (USD) 3,3223,6604,3154,4814,522
General Government Balance (in % of GDP)
General Government Gross Debt (in % of GDP) 52.062.852.452.255.4
Inflation Rate (%)
Unemployment Rate (% of the Labour Force)
Current Account (billions USD) -18.71-4.6113.991.59-5.78
Current Account (in % of GDP) -12.8-

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

Note : (E) Estimated data


Main Sectors of Industry

Agriculture accounts for 13% of GDP and employs 10% of the workforce (World Bank, latest data available). The main crops are wheat, barley, oats, citrus, wine grapes, olives, tobacco and dates. Algeria produces a large quantity of cork and is an important livestock farmer. In late 2020, the government introduced a 2020-2024 roadmap strategy to develop the soft wheat, maize, sugar and oilseeds sectors with the aim to reduce the annual food import bill (FAO). According to official governmental figures, the production of cereals reached 41 million quintals in the 2021/2022 agricultural season, an increase of 48% compared to the previous one, while the production of legumes increased by 20% and that of potatoes by 30%.

The secondary sector represents 20.3% of GDP, employing 30% 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 five 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 products, chemical products, metals and construction materials. The manufacturing sector alone accounts for 26% of GDP. Figures from the Ministry of Industry show that in 2022 the public industrial sector recorded a growth rate of over 8%, mostly thanks to a raise in energy exports, favoured by the EU sanctions against Russia.

The tertiary sector contributes to 44% of 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) 9.6 30.4 60.0
Value Added (in % of GDP) 13.0 38.9 44.0
Value Added (Annual % Change) -1.3 7.4 3.1

Source: World Bank, Latest data available.


Find more information about your business sector on our service Market Reports.

Indicator of Economic Freedom


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.

World Rank:
Regional Rank:


Business environment ranking


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.

World Rank:

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024


Country Risk

See the country risk analysis provided by Coface.


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Political Outline

Current Political Leaders
President-elect: Abdelmadjid Tebboune (since 19 December 2019)
Prime Minister: Ayman Benabderrahmane (since 7 July 2021)
Next Election Dates
Presidential: 2024
Council of the Nation: NA
National People's Assembly: 12 June 2026
Current Political Context
Abdelmajid Tebboune, Bouteflika's prime minister in 2017, has been in charge as President since December 2019. In the 2021 snap legislative elections called against the backdrop of continuing protests (‘Hirak’) and the constitutional reform approved by referendum in November 2020, the National Liberation Front, the country's dominant political party since independence in 1962, obtained the majority of seats (98 of 407) but lost more than 60 seats; same as for its traditional ally, the National Democratic Rally (58 seats, -40 compared to the previous election). The Movement of Society for Peace and independents made significant gains, obtaining 65 and 84 seats, respectively.
Despite the tense diplomatic relations with Morocco, which led to the closure of the Maghreb-Europe gas pipeline, Algerian diplomacy was active in 2022, particularly in relation to the country’s hydrocarbon exports to Europe: in July, the Italian oil company Eni, American Occidental and French Total signed a USD 4 billion oil and gas production-sharing contract with Algeria’s state-owned Sonatrach. Moreover, plans for a Trans-Saharan gas pipeline passing through Algeria, Nigeria and Niger have been restated.
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).

The main opposition parties include:

  • Movement of Society for Peace (MSP): Sunni Islamism, Islamic democracy, aligned with the international Muslim Brotherhood
  • People's Voice 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).
Type of State
Algeria is a constitutional representative democracy. It is based on a multi-party semi-presidential regime.
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 144 seats, 96 members are indirectly elected in secret ballot (2/3) and 48 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.

Indicator of Freedom of the Press


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.).

World Rank:

Indicator of Political Freedom


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.

Not Free
Political Freedom:
Civil Liberties:

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House


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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
ent, consult the dedicated page on the KPMG website.
For updates on the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) undertaken by the Algerian government, please consult the country's dedicated section in the IMF’s Policy Tracker platform.

Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, 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.


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Latest Update: September 2023