publication April 16, 2018

Algeria's Economic Outlook - April 2018

In Algeria, growth is expected to recover sharply in 2018 as fiscal expansion takes hold. As new public investments announced in the 2018 budget are carried out, headline growth and inflation will increase. As a result, GDP growth is expected to stand at 3.5%, inflation at 7.5% for 2018. Yet, GDP growth will struggle to surpass the 2% threshold for 2019-20, constituting anemic growth for a middle-income country with a large youth bulge.

The unemployment rate increased by 1.2%, reflecting sluggish non-hydrocarbon growth. It stood at 11.7% in September 2017, an increase from 10.5% in September 2016. Unemployment is particularly high among the educated, youth, and women.

The rise in unemployment undermines poverty reduction. 10% of the population is considered vulnerable to fall back into poverty and important regional disparities persist with some regions featuring double (Sahara) or triple (Steppe) the national poverty rate. The most recent official calculations (2011) placed the national poverty rate at 5.5%, with a mere 0.5% of the population living in extreme poverty. Official calculations are based on a poverty line estimated to be $3.57 ($3.18) USD/day in 2011 PPP in urban (rural) areas, which could be perceived as low for an upper middle country.