In its latest report on monitoring the economic situation in Algeria, the World Bank (World Bank) indicated that the Algerian economy will continue its economic recovery during this year. However, she noted the importance of the non-hydrocarbon sector for sustainable growth.
In a report made public on January 4, the World Bank said that “the Algerian economy continued to recover during the first half of 2022, supported by the return of oil production to pre-pandemic levels and the recovery of the services sector, as well as the ‘a more vigorous agricultural activity’.
Thus, according to the World Bank, “this recovery should continue during 2023, driven by the non-hydrocarbon sector and the growth of public expenditure”.
In addition, the latest report from the World Bank mentioned the external balances, noting “their recovery and their continued growth, in particular thanks to the rise in world prices of hydrocarbons”. “After increasing by around 59% in the first six months of 2022 and peaking in June, the average price of Algerian hydrocarbon exports fell around 26% in the third quarter of 2022,” the same source noted.
Another factor has supported the external balances according to the World Bank, it is “the notable increase in non-hydrocarbon exports”. Furthermore, the same report also noted the fact that “the dinar appreciated against the US dollar and the euro”.
Economic situation of Algeria: what about inflation?
According to the World Bank report, “Inflation remains high at 9.4% year-on-year in the first nine months of 2022, particularly due to the rise in global food prices, which increased by 13, 6% in Algeria, thus affecting the poorest families”.
Moreover, the Bank of Algeria welcomed the efforts of the Algerian authorities to deal with it. In particular “the intensification of measures to protect purchasing power, through the increase in public service salaries, the introduction of unemployment benefits and the strengthening of subsidies for basic food products”, underlined the same source. .
However, the report warned that “this level of spending could lead to problems in the medium term if global oil prices fall, thereby reducing government revenue.”
Economy in Algeria: what does the World Bank predict for 2023?
Moreover, the resident representative of the World Bank in Algeria, Kamel Braham, affirmed that “we had to stay the course”. And this, through “the implementation of the measures of the Government’s Action Plan to increase the mobilization of tax revenues”. But also, “the efficient use of public resources and the promotion of private sector investment”. Which, according to him, “is essential to safely address global challenges and put Algeria on the path to sustainable and inclusive growth”.
To conclude its report, the World Bank delivered its forecasts for the Algerian economy during the year 2023. Indeed, it forecast “a growth of the Algerian economy of 2.3% during the current year”. However, according to the same report, “the macroeconomic outlook remains vulnerable to fluctuations in world hydrocarbon prices”.
It is also for this reason that “in the medium and long term, the private sector excluding hydrocarbons must become the engine of Algerian growth and the diversification of the economy”, added the report.
“The continued implementation of government structural reform programs, the creation of greater openness to the private sector, the improvement of the competitiveness of the economy and the strengthening of investment in human capital are all essential to the flourishing and resilience of the Algerian economy”, recommended the World Bank.
