Economy of Algeria

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.

GDP: purchasing power parity - $147.6 billion (1999 est.)

GDP - real growth rate: 3.9% (1999 est.)

GDP - per capita: purchasing power parity - $4,700 (1999 est.)

GDP - composition by sector:
agriculture: 12%
industry: 51%
services: 37% (1997 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): 4.2% (1999 est.)

Labor force: 9.1 million (2000 est.)

Labor force - by occupation: government 29.5%, agriculture 22%, construction and public works 16.2%, industry 13.6%, commerce and services 13.5%, transportation and communication 5.2% (1989)

Unemployment rate: 30% (1999 est.)

Budget:
revenues: $15.5 billion
expenditures: $15.1 billion, including capital expenditures of $NA (1999 est.)

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

Industrial production growth rate: 7% (1999 est.)

Electricity - production: 21.38 billion kWh (1998)

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

Electricity - consumption: 19.882 billion kWh (1998)

Electricity - exports: 313 million kWh (1998)

Electricity - imports: 312 million kWh (1998)

Agriculture: Ever since the time of the Romans Algeria has been noted for the fertility of its soil. About one-quarter of the inhabitants are engaged in agricultural pursuits. More than 7,500,000 acres are devoted to the cultivation of cereal grains. The Tell is the grain-growing land. Under French rule its productiveness was increased dramatically 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 during the United States' Civil War, but the industry afterwards declined. 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 oil) and tobacco are cultivated with great success. The soil of Algeria everywhere favours the growth of the vine. 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 culture of the vine was early undertaken by the colonists, but it was not until vineyards in France were attacked by phylloxera that the export of wine from Algeria became considerable. Algerian vineyards were also attacked in 1883 despite precautionary measures, but in the meantime the worth of their wines had been proved. In 1850 less than 2000 acres were devoted to the grape, but in 1878 this had increased to over 42,000 acres, which yielded 7,436,000 gallons of wine. Despite bad seasons and ravages of insects, cultivation extended, and in 1895 the vineyards covered 300,000 acres, the produce being 88,000,000 gallons. The area of cultivation in 1905 exceeded 400,000 acres, and in that year the amount of wine produced was 157,000,000 gallons. 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. Algeria also exports figs, dates, and cork.

Fishery is a flourishing but not a large industry. The fish caught are principally sardines, bonito, smelts and sprats. Fresh fish are exported to France, dried and preserved fish to Spain and Italy. Coral fisheries exist 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.

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: $13.7 billion (f.o.b., 1999 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 21.2%, United States 15.0%, France 12.9%, Spain 10.3%, Brazil 5.9%, Netherlands 5.5% (1998)

Imports: $9.3 billion (f.o.b., 1999 est.)

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

Imports - partners: France 29.5%, Italy 9.8%, United States 7.2%, Spain 6.8%, Germany 6.2%, Canada 4.1% (1998)

Debt - external: $30 billion (1999 est.)

Economic aid - recipient: $897.5 million (1994)

Currency: 1 Algerian dinar (DA) = 100 centimes

Exchange rates: Algerian dinars (DA) per US$1 - 69.046 (January 2000), 66.574 (1999), 58.739 (1998), 57.707 (1997), 54.749 (1996), 47.663 (1995)

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