Skip to Main Navigation
publication April 16, 2020

Algeria's Economic Outlook — April 2020

A view of Algiers, the capital of Algeria, from hotel El Aurassi.

Download Algeria report: English

Following a year of political uncertainty and social unrest leading to the deceleration of economic activity, Abdelmadjid Tebboune won the December 2019 Presidential election. In 2020, the COVID-19 outbreak will slow down consumption and investment, while falling oil prices will cut into fiscal and export revenues. The new Government has the difficult task to maintain macroeconomic stability, respond to the public health crisis and pursue structural reforms.

GDP growth moderated to 0.9% in 2019, compared to 1.4% during the previous year. The oil sector has shown a lower average contraction in the first nine months of 2019 compared to the previous year (-4.3% against -6.4% in 2018). Meanwhile, non-hydrocarbon activity grew by 2.6% over the same period, down from 3.3% in 2018.

Algeria is facing a combined shock from halving oil prices, a public health crisis and the consequences of global economic disruptions following the COVID-19 outbreak. An oil price at US$ 30/barrel in 2020 would decrease Algeria’s total fiscal revenues by 21.2%. Despite cuts to public investment (-9.7%) and public consumption (-1.6%) envisaged by the 2020 Finance Law, the fiscal deficit would increase to 16.3% of GDP. Meanwhile, the sharp decline in export revenues (-51%) will lead the trade deficit to expand to 18.2% of GDP and the current account deficit to peak at 18.8% of GDP in 2020, despite efforts to contain imports and weak domestic demand.

GDP is currently projected to contract by 3%, in line with contracting private consumption and investment, as well as falling public investment, which represents 44% of total investment. COVID-19 containment measures such as restriction on movement and gatherings, compounded by high economic uncertainty, will discourage private consumption and investment.