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» 27.01.2011 - Algeria "must reduce oil dependence" to avoid unrest
» 22.09.2010 - Morocco, Algeria arms race accelerating
» 02.07.2010 - Algeria wants tourists back to desert pearls
» 08.06.2010 - Difficult Algeria-EU ties may deepen
» 16.03.2010 - Russia's Gazprom enters Africa through Algerian field
» 08.03.2005 - Algeria union promotes women's rights
» 02.11.2004 - "Algeria at economic crossroads"
» 29.01.2004 - Strong economic growth in Algeria

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Economy - Development | Labour

Algeria "not affected by global crisis"

afrol News, 5 November - Algeria stands out as one of the countries least affected by the global financial crisis, a new analysis shows. The non-oil sectors of economy are growing by around 9 percent this year, and only low oil prices contribute to a GDP retraction.

The International Monetary Fund (IMF) in its newest analysis of the Algerian economy released today concludes that the North African country "has not been directly affected by the global financial crisis." Economic growth and diversification has gone on unabated in Algeria during this year of crisis everywhere else.

According to the latest IMF data, non-hydrocarbon growth in 2009 "is expected to reach 9 percent, thanks to exceptional grain harvests and good performance by sectors driven by the public investment programme." This corresponds well to the numbers expected before the inset of the global crisis.

Nevertheless, Algeria's GDP actually will decline this year. "The marked reduction in hydrocarbon output is expected to reduce overall GDP growth to about 2 percent," IMF analysts conclude. Oil and gas prices at large have been far lower this year than in 2008, and as the Algerian economy still is very dependent on hydrocarbons, these temporary low oil prices result in an overall negative result.

"Despite a deteriorated international environment, Algeria has continued to post good economic performance, consistent with its trend in recent years, and characterised by solid non-hydrocarbon growth, control of inflation, and reduction of unemployment, which however remains high, especially among the youth," IMF analyst Joël Toujas-Bernaté said in Algiers yesterday.

Mr Toujas-Bernaté added that Algerian authorities had maintained a sober policy during the year. "Thanks to prudent financial policies, comfortable external reserves and fiscal savings have been built up, and external debt has been kept at a very low level," he pointed out.

To maintain its social programmes and keep unemployment declining, Algiers authorities for the first time in a decade count on a budget deficit this year. The deficit could reach 8.4 percent of GDP in 2009, compared with a surplus of 8.1 percent of GDP in 2008, according to the IMF. The Fund nevertheless found no reason to criticise government on this one-time deficit blamed on "the decline in hydrocarbon receipts."

Also for 2010, prospects were good. The solid growth in the non-oil sectors is expected to continue. Further on, the Fund expects Algeria to benefit from higher oil and gas prices next year, which altogether should provide for a very strong GDP growth. "The hydrocarbon sector is expected to experience improved activity in 2010 with the recovery of world growth, and may make a positive contribution to overall growth for the first time in several years," Mr Toujas-Bernaté believed.

Algeria has experienced marked economic growth during the last decade, with great successes including the total down-payment of foreign debts and a major build-up of foreign reserves. Slowly, the vast country is also seeing some progress in reducing its high unemployment rates, seen as a major threat to political stability and national security.

Critics however hold that despite Algeria's impressive economic growth and adjustment to the IMF's policy advises, surprisingly slow progress is made on the social field. While other North African nations have managed to translate a more modest growth into social progress and a better business climate, human and business development in Algeria is slow.

Notably, much of Algeria's non-oil growth during the last years has been derived from the large public investment programme, as also IMF data show. While large investments in for example infrastructure are good for both employment and development, little progress is nonetheless seen in Algeria's private sector.

The 'North Africa Journal' in an editorial in its latest issue hit the nail when advising Algerian policymakers to "go back to the drawing board" to sort out how to let the populace take part in the economic boom. "Why after all these macroeconomic gains so praised by the IMF, many Algerians feel left out?" the journal asks.

"Algeria's regulatory reforms meant to stimulate activity have failed," it rhetorically answers, noting that the business environment in which entrepreneurs that create jobs operate "has deteriorated" according to global rankings. Colonial regulations complicating each step in private enterprise are still in place, unreformed, the journal's analysts conclude.

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