The Algerian economy is expected to slow down in the medium term. Real GDP growth is expected to average 1.2% in 2017-2019. The downward revision of growth projections compared to the Fall 2016 projections is due to the announced fiscal consolidation and a moderation of hydrocarbon production growth. In 2017- 19, a modest 2.5% increase in hydro-carbon production resulting from the start of production in new oil wells and a positive correction in oil prices will mitigate the negative effect of fiscal and current account consolidation on the real non-oil sectors. Continued lower levels of oil prices (albeit with some positive correction) and sluggish household demand due to high levels of unemployment and/or inactivity will help keep a lid on inflation. The fiscal deficit is estimated to further decline to below 5% in 2017 and one percent by 2019, if the government maintains tight control over spending.