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Economy of Algeria

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Contents

Economy - overview

In Algeria, the hydrocarbons sector is the backbone of the economy, accounting for roughly 52% of budget revenues, 25% of GDP, and over 95% of export earnings. Algeria has the fifth-largest reserves of natural gas in the world and is the second largest gas exporter; it ranks fourteenth for oil reserves. Algiers' efforts to reform one of the most centrally planned economies in the Arab world stalled in 1992 as the country became embroiled in political turmoil.

Burdened with a heavy foreign debt, Algiers concluded a one-year standby arrangement with the International Monetary Fund in April 1994 and the following year signed onto a three-year extended fund facility which ended 30 April, 1998. Some progress on economic reform, Paris Club debt reschedulings in 1995 and 1996, and oil and gas sector expansion contributed to a recovery in growth since 1995, reducing inflation to approximately 1% and narrowing the budget deficit. Algeria's economy has grown at about 4% annually since 1999. The country's foreign debt has fallen from a high of $28 billion in 1999 to its current level of $24 billion. The spike in oil prices in 1999-2000 and the government's tight fiscal policy, as well as a large increase in the trade surplus and the near tripling of foreign exchange reserves has helped the country's finances. However, an ongoing drought, the after effects of the November 10, 2001 floods and an uncertain oil market make prospects for 2002-03 more problematic. The government pledges to continue its efforts to diversify the economy by attracting foreign and domestic investment outside the energy sector. However, it has thus far had little success in reducing high unemployment, officially estimated at 30% and improving living standards.

President Bouteflika has announced sweeping economic reforms, which, if implemented, will significantly restructure the economy. Still, the economy remains heavily dependent on volatile oil and gas revenues. The government has continued efforts to diversify the economy by attracting foreign and domestic investment outside the energy sector, but has had little success in reducing high unemployment and improving living standards. Other priority areas include banking reform, improving the investment environment, and reducing government bureaucracy.

The government has announced plans to sell off state enterprises: sales of a national cement factory and steel plant have been completed and other industries are up for offer. In 2001, Algeria signed an Association Agreement with the European Union; it has started accession negotiations for entry into the World Trade Organization.

Statistics

GDP: purchasing power parity - $196 billion (2003 est.)

GDP - real growth rate: 7.4% (2003 est.)

GDP - per capita: purchasing power parity - $6,000 (2003 est.)

GDP - composition by sector:
agriculture: 10.2%
industry: 56.5%
services: 33.4% (2003 est.)

Population below poverty line: 23% (1999 est.)

Household income or consumption by percentage share:
lowest 10%: 2.8%
highest 10%: 26.8% (1995)

Inflation rate (consumer prices): 3.5% (2003 est.)

Labor force: 9.6 million (2003)

Labor force - by occupation: government 32%, agriculture 14%, construction and public works 10%, industry 13.4%, trade 14.6%, other 16% (2003 est.)

Unemployment rate: 26.2% (2003 est.)

Budget:
revenues: $25.49 billion
expenditures: $22.87 billion, including capital expenditures of $5.8 (2003 est.)

Industries: petroleum, natural gas, light industries, mining, electrical, petrochemical, food processing

Industrial production growth rate: 6% (2003 est.)

Electricity - production: 24,690 GWh (2001)

Electricity - production by source:
fossil fuel: 99.77%
hydro: 0.23%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 22,900 GWh (2001)

Electricity - exports: 340 GWh (2001)

Electricity - imports: 275 GWh (2001)

Agriculture

Since Roman times Algeria has been noted for the fertility of its soil. About a quarter of the inhabitants are engaged in agricultural pursuits. More than 7,500,000 acres (30,000 km²) are devoted to the cultivation of cereal grains. The Tell is the grain-growing land. During the time of French rule its productivity was increased substantially by the sinking of artesian wells in districts which only required water to make them fertile. Of the crops raised, wheat, barley and oats are the principal cereals. A great variety of vegetables and of fruits, especially citrus products, is exported.

A considerable amount of cotton was grown at the time of the United States' Civil War, but the industry declined afterwards. In the early years of the 20th century efforts to extend the cultivation of the plant were renewed. A small amount of cotton is also grown in the southern oases. Large quantities of crin vegetal (vegetable horse-hair) an excellent fibre, are made from the leaves of the dwarf palm. The olive (both for its fruit and Petroleum) and tobacco are cultivated with great success.

Algeria also exports figs, dates, esparto grass, and cork.

Wine Production

Throughout Algeria the soil of favours the growth of vines. The country, in the words of an expert sent to report on the subject by the French government,

"can produce an infinite variety of wines suitable to every constitution and to every caprice of taste."

The growing of vines was undertaken early by the colonists, but it was not until vineyards in France were attacked by phylloxera that the export of wine from Algeria became significant. In 1883, despite precautionary measures, Algerian vineyards were also attacked but in the meantime the quality of their wines had been proved. In 1850 less than 2000 acres (8 km²) were devoted to the grape, but in 1878 this had increased to over 42,000 acres (170 km²), which yielded 7,436,000 gallons (28,000 m³) of wine. Despite bad seasons and ravages of insects, cultivation extended, and in 1895 the vineyards covered 300,000 acres (1,200 km²), the produce being 88,000,000 gallons (333,000 m³). The area of cultivation in 1905 exceeded 400,000 acres (1,600 km²), and in that year the amount of wine produced was 157,000,000 gallons (594,000 m³). By that time the limits of profitable production had been reached in many parts of the country. Practically the only foreign market for Algerian wine is France, which in 1905 imported about 110,000,000 gallons (416,000 m³).

Fishing

Fishing is a flourishing but minor industry. Fish caught are principally sardines, bonito, smelt and sprats. Fresh fish are exported to France, dried and preserved fish to Spain and Italy. Coral fisheries are found along the coast from Bona to Tunis.

Minerals

Algeria is rich in minerals; the country has many iron, lead and zinc, copper, calamine, antimony and mercury mines. The most productive are those of iron and zinc. Lignite is found in Algiers; immense phosphate beds were discovered near Tebessa in 1891, yielding 313,500 tons in 1905. Phosphate beds are also worked near Setif, Guelma and Ain Beida. There are more than 300 quarries which produce, amongst other stones, onyx and beautiful white and red marbles. Algerian onyx from Ain Tekbalet was used by the Romans, and many ancient quarries have been found near Kleber, some being certainly those from which the long-lost Numidian marbles were taken. Salt is collected on the margins of the chotts.

Foreign Trade

Under French administration the commerce of Algeria developed greatly: the total imports and exports at the time of the French occupation (1830) did not exceed £ 175,000. In 1850 the figures had reached £ 5,000,000; in 1868, £ 12,000,000; in 1880, £ 17,000,000; and in 1890, £ 20,000,000. From this point progress was slower and the figures varied considerably year by year. In 1905 the total value of the foreign trade was £ 24,500,000. About five-sixths of the trade is with or via France, into which country several Algerian goods have been admitted duty-free since 1851, and all since 1867. French goods, except sugar, have been admitted into Algeria without payment of duty since 1835. After the increase, in 1892, of the French minimum tariff, which applied to Algeria also, foreign trade greatly diminished.

By far Algeria's most significant exports, financially, are petroleum and natural gas. The reserves are mostly in the Eastern Sahara; the Algerian government curbed the exports in the 1980s to slow depletion; exports increased again somewhat in the 1990s. Other significant exports are sheep, oxen, and horses; animal products, such as wool and skins; wine, cereals (rye, barley, oats), vegetables, fruits (chiefly figs and grapes for the table) and seeds, esparto grass, oils and vegetable extracts (chiefly olive oil), iron ore, zinc, natural phosphates, timber, cork, crin vegetal and tobacco. The import of wool exceeds the export. Sugar, coffee, machinery, metal work of all kinds, clothing and pottery are largely imported. Of these by far the greater part comes from France. The British imports consist chiefly of coal, cotton fabrics and machinery.

Exports

Algeria trades most extensively with France and Italy, in terms of both imports and exports, but also trades with the United States and Spain.

Total exports

$24.96 billion (f.o.b., 2003 est.)

Exports - commodities: petroleum, natural gas, and petroleum products 97%. The largest port is Algiers, after which follow Oran, Skikda, and Bona. There is a considerable coasting trade. The average number of vessels entering and clearing Algerian ports each year has been, since 1900, about 4000, with a total tonnage of some 6,500,000. In the coasting trade some 12,000 small vessels are engaged.

Exports - partners

Italy 19.7%, US 18.7%, France 13.8%, Spain 11.3%, Canada 6.9%, Belgium 5.1%, Turkey 4.4%, Brazil 4.3% (2003 est.)

Imports

$12.42 billion (f.o.b., 2003 est.)

Imports - commodities: capital goods, food and beverages, consumer goods

Imports - partners

France 32.1%, Italy 9.9%, Spain 6.3%, Germany 5.7%, China 4.8% (2003 est.)

Debt - external

$22.71 billion (2003 est.)

Economic aid - recipient: $182 million (2001)

Currency: 1 Algerian dinar (DA) = 100 centimes

Exchange rates: Algerian dinars per US dollar - 77.395 (2003), 79.6819 (2002), 77.215 (2001), 75.2598 (2000), 66.5739 (1999)

Fiscal year: calendar year

Reference

Much of the material in this article comes from the CIA World Factbook 2000 and the 2003 U.S. Department of State website.

See also : Algeria


Organization of the Petroleum Exporting Countries (OPEC)
Algeria | Indonesia | Iran | Iraq | Kuwait | Libya | Nigeria | Qatar | Saudi Arabia | United Arab Emirates | Venezuela
pt:Economia da Argélia
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