The main challenge remains high dependency on hydrocarbon revenues. The hydrocarbon sector accounted for 14 percent of GDP, 83 percent of exports, and 47 percent of budget revenues between 2019-2023. Algeria aspires to diversify its economy to vary revenue sources and improve employment prospects, particularly for young people. Unemployment was 12.7 percent overall, with 25.4 percent for women and 29.3 percent among youth (15-24) in 2024.
Despite moderating hydrocarbon production, growth has been robust since the pandemic. GDP grew 3.8 percent in 2021, 3.6 percent in 2022, and 4.1 percent in 2023, fueled by public spending rising over 60 percent between 2021-2023. However, falling prices and OPEC cuts, coupled with investment-driven imports and spending growth, pressured fiscal and external balances.
Since 2020, the government has taken steps to boost investment by issuing new Hydrocarbon, Investment, and Money and Credit Laws, partly lifting foreign ownership restrictions. The September 2021 Government Action Plan prioritized transitioning to private sector-led growth, rationalizing public spending, reducing imports, boosting non-hydrocarbon exports, and improving the business environment through banking and state enterprise reforms.
