Like other world economies, the Algerian economy was hit hard by the health crisis followed by the war in Ukraine. However, this war had a positive side given that the Algerian economy is almost dependent on hydrocarbons. However, due to this war, food products soared in world markets, which partly caused inflation to explode in Algeria.
It must be said that Algeria continues to collect good points from international and national financial institutions. Indeed, in its economic note relating to the monetary and financial trends of the Algerian economy during the first nine months of 2023, the Bank of Algeria mentioned a “positive development” in the macroeconomic situation in Algeria.
“On the side of the national economy, compared to the same period of the previous year, the macroeconomic situation in Algeria remains marked by a positive development”, we can read in this note.
Growth of the Algerian economy on target
The note from the Bank of Algeria indicates that economic growth was 3% in the first quarter of 2023, while it was 2.4% during the same period in 2022. The hydrocarbon sector grew by 1.4 % compared to a slowdown of 2.3% in the first quarter of 2022. “Excluding hydrocarbons, gross domestic product continued to grow in the first quarter of 2023 with significant growth of 4% compared to 3.9% a year earlier,” further underlines the Bank of Algeria.
In the first quarter of 2023, the industrial sector experienced the best performance with growth of 6.1% compared to 4.2% the previous year. The “BTPH” sector also experienced an increase in its activity of 4.7% in volume compared to 3% in the first quarter of 2022. These two sectors are becoming the locomotive of the Algerian economy.
Inflation remains high
Even if it has decreased slightly, inflation remains very high in Algeria. It went from 9.71% in September 2022 to 9.55% in September 2023. This slight decrease is notably due to the slowdown in price increases in the “Food – Non-alcoholic beverages” and “Miscellaneous” groups. Inflation for the first group increased from 13.58% to 13.28%. For the second group, it went from 12.67% to 8.46%. Both variations are calculated between September 2022 and September 2023.
However, year-on-year, the national consumer price index increased by 8.84% in 2022 and 2023.
The trade balance surplus decreased
The note from the Bank of Algeria reveals that at the end of the first nine months of 2023, the surplus in the overall balance of the balance of payments decreased. This surplus, which was $11.9 billion in September 2022, fell to $6.6 billion in September 2023.
The decline is explained by a “context characterized by a sharp reduction in the external current account surplus which recorded a decrease of 7.8 billion dollars, going from 13.5 billion dollars during the first nine months of 2022 to 5.7 billion dollars in the same period of 2023.”
It must be said that the Bank of Algeria underlines that “this decline is attributable to the decrease in exports of goods which reached 41.3 billion dollars at the end of September 2023 compared to 47.9 billion dollars at the end of September 2022 and an increase in imports of goods which increased from $28.9 billion at the end of September 2022 to $31.3 billion at the end of September 2023.”
Also, due to “the decline in world oil prices, hydrocarbon exports fell to reach $37.4 billion at the end of September 2023 compared to $43.4 billion at the end of September 2022”, adds the note from the Bank of Algeria.
