Economic diversification, job creation, non-hydrocarbon exports...: The World Bank praises the Algerian authorities' approach.

The increase in investments, especially in large industrial projects, has boosted Algeria's economic activity in the first quarter of 2023 and is expected to continue supporting growth between 2023 and 2025, according to the World Bank's latest report on the economic situation in Algeria.

"Algeria has the potential to diversify its economy, reduce its dependence on imports, increase non-hydrocarbon exports, and create sustainable jobs in the private sector," as stated by Mr. Kamel Braham, the World Bank's Resident Representative in Algeria, quoted in the report.

"The good performance of the hydrocarbon sector and positive investment dynamics are expected to continue," noted Mr. Cyril Desponts, Senior Economist for the World Bank in Algeria, affirming that "Algeria has implemented short-term macroeconomic cushions through the accumulation of foreign exchange reserves and budgetary savings."

In its report addressing the key economic developments and prospects of the country, the World Bank highlighted that Algeria's economy "recovered its pre-pandemic level in 2022, with continued recovery in the first half of 2023. Algeria's growth is also expected to return to its pre-COVID trajectory by 2024, driven particularly by the hydrocarbon and agriculture sectors."

Regarding non-hydrocarbon activity, the report estimated that Gross Domestic Product (GDP) growth is expected to be "stronger in 2024 and 2025, thanks to the recovery of agricultural production and crude oil production following OPEC quota adjustments," with an emphasis on robust investment growth that should continue to support industrial activity, especially in the private sector.

According to the World Bank's projections, "inflation is expected to gradually decline in 2024 and 2025" with prudent monetary and fiscal policies and if "precipitation recovers, supporting a strong agricultural output."

As for the trade balance, the World Bank forecasts it will remain "positive" in 2023, 2024, and 2025, while also foreseeing the continued accumulation of foreign exchange reserves during these three years.

"The authorities have accumulated more foreign exchange and oil savings, enhancing the medium-term resilience of the Algerian economy, while the increase in gas prices and rising oil prices in the second quarter of 2023 could extend the windfall from hydrocarbons," as stated in this document.