Algeria Economic Forecast

After averaging 2.6% in H1 2022, annual economic growth rose to 3.5% in Q3 2022. Our panelists expect growth to have further accelerated in Q4 2022. Turning to Q1 2023, available data suggests that the economy is slowing. Oil production fell slightly in the first quarter compared to the fourth quarter, suggesting a weak hydrocarbons sector. Moreover, merchandise exports grew almost six times less in January than in Q4 in annual terms. Additionally, inflation accelerated in Q1 compared to Q4, likely weighing on private spending. That said, the year-on-year growth figure for private spending is likely to be flattered by a base effect created by the fact that an unemployment benefit—now benefitting hundreds of thousands of Algerians—was introduced at the end of Q1 last year.

Inflation rose to 10.2% in March from 9.7% in February. Price pressures continued to be stoked by soaring food prices. Inflation is seen easing later this year thanks to government subsidies and a tougher base effect. Key factors to watch include the currency, the weather and the fate of the Ukraine grain corridor.