Algeria - Overview
French is still used by many Algerians, especially in the administration.
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In order to promote the growth of the domestic market, the Algerian government has launched a major construction policy, namely in the sector of transport infrastructures. Today, this policy is criticized because of two reasons. Firstly, at the time this program was started, the price of the oil barrel was very high. Current global market conditions have changed considerably and some observers question the suitability of this policy. More so because Algeria is running on a "negative multiplier", which means that the resources injected into the economy are much higher than the wealth generated. The new five-year plan for 2010-2014, which follows in the direction of the previous one, emphasizes modernization the infrastructures and privatization of the economy.
The current unemployment rate in Algeria is officially at 10% but some claim it is closer to 20%. The per capita GDP was USD 4,600 in 2008. It should be noted that there is a large discrepancy between the urban and rural living conditions.
The industry contributes nearly 55% of the GDP and employs a quarter of the population. The oil and gas sector accounts for the majority of budgetary income, and almost all of export income. Algeria is the 2nd biggest gas exporter in the world. It ranks 18th for its petroleum reserves and 10th for its gas reserves. The ores mined in big quantities are iron, lead, phosphate, uranium, zinc, salt and coal. The main activities of the manufacturing sector are industrial food processing, textile, chemical products, metals and construction materials.
The tertiary sector contributes about a third of the GDP and employs more than half of the workforce.
Foreign trade overview
Algerian exports grew by 223% between 2002 and 2008, mainly due to the explosion of world’s oil prices, oil representing the near totality of the country’s exports. During this period, the trade balance has generated a significant surplus giving Algeria comfortable foreign currency reserves (USD 150 billion in 2009). Unfortunately, in 2010, the drop in global oil prices and the sustained high levels of imports have lead to a significant worsening of the Algerian trade balance. This should nevertheless remain in surplus in 2011.
The main trade partners of Algeria are the European Union, the NAFTA countries (Free Trade Agreement between United States, Canada, and Mexico) and China.
The series of protectionist measures taken by the Algerian government, including a new regulation concerning the FDIs and imposing an Algerian majority stake of 51%, can also be seen as a discouraging factor in terms of the FDIs. Likewise, corruption and heavy bureaucracy, as well as the weak financial system and legal insecurity in terms of intellectual property rights, constitute an impediment to investment. Officially, the government remains committed to economic liberalization and continues to seek foreign investment in sectors such as the infrastructures, telecommunications, energy and water supply. There has also been a noticeable reorientation of the FDI toward the domestic market, through an efflorescence of developmental projects in transport and infrastructure.
The sectors attracting most FDI are the energy sector, followed by the telecommunications and tourism.