Economy of Algeria

The economy of Algeria deals with Algeria's current and structural economic situation. Currently, Algeria has a mixed economy. Since independence in 1962, Algeria has launched major economic projects to build up a dense industrial base. However, despite these major achievements (roads, freeways, universities, hospitals, factories, housing, metro and tramway systems, etc.), the Algerian economy has gone through various stages of turbulence.

In the 1980s, the Algerian economy experienced major difficulties. The oil counter-shock of 1986 dealt a heavy blow to a virtually rentier economy, during the period of anti-scarcity and stabilization plans. In the early 1990s, Algeria embarked on a series of structural reforms, making the transition to a market economy a reality.

In 2012, the Algerian economy remains highly dependent on hydrocarbon rents, which represent the country's main source of revenue, without having succeeded in diversifying and establishing internationally competitive industrialization.

The 2017 report on Algeria by business intelligence and consultancy firm Oxford Business Group (OGB), highlights the efforts devoted by the country to strengthening and diversifying its economy against the backdrop of falling oil prices. The report highlights the growing contribution of the private sector to GDP, in particular the role of small and medium-sized enterprises (SMEs) supported by new measures; as well as the financial services sector, which has seen positive developments such as the introduction of online payments.

Despite the efforts made, the country still faces a number of short-term problems, including the need to diversify the economy, strengthen political, economic and financial reforms, improve the business climate and reduce social inequality between regions, in order to achieve better economic growth. Algeria has the triple leverage of energy, mining and agriculture to contribute, in the long term, to containing the supply crises in energy, rare earths (minerals useful for technology) and food.

Published in 2023, the World Bank's report on the Algerian economy calls for the acceleration of institutional and micro-economic reforms, and paints a positive picture for the country's economy. The World Bank notes that the promulgation in 2022 of the new investment law and the publication of its implementing regulations, the abolition in 2020 of the 51/49 rule for non-strategic sectors, and the publication of the new hydrocarbons law in 2019 are positive steps, but must tackle the ecosystem, including paralyzing bureaucracy, with greater visibility in socio-economic policy.

Continued implementation of government structural reform programs, creating greater openness to the private sector, improving the economy’s competitiveness, and strengthening investment in human capital are all essential to the flourishing and resilience of the Algerian economy.