WASHINGTON – The growth of Algeria’s economy remained “buoyant” in 2016, despite low global oil prices, said Monday the World Bank (WB), expecting it to slow down in 2017 due to the rebalancing of public finances.
In 2016, Algeria “posted a sustained growth at a rate of 3.8%, similar to 2015’s” 3.9%, said the World Bank in its Algeria’s Economic Outlook- April 2017 published Monday in Washington.
This solid growth is driven by “the recovery of hydrocarbon production which increased by 3.6% in 2016 compared to 0.4% in 2015,” explained the Bretton Woods Institution.
This sustained growth is the fruit of a process of rebalancing of the public finances, which allowed reducing the budgetary deficit to 12.2% of GDP in 2016, against 16.2% of GDP in 2015, said the international financial institution.
==Impact of the rebalancing of the public finances ==
This rebalancing of the public finances, necessary for the national economy, should, in the medium term, lead to the slowdown of growth due to fall in the public expenses but which is expected to reduce the budgetary deficits.
“The downward revision of growth projections compared to the Fall 2016 projections is due to the announced fiscal consolidation and a moderation of hydrocarbon production growth,” said the World Bank in note on Algeria.
According to the same forecasts, the real GDP growth is expected to average 1.2% in 2017-2019.
For 2017, the World Bank expects a 1.5% growth rate which will decline to 0.6% in 2018 before recovering to 1.5% in 2019.
Thanks to the control of expenses, Algeria will be able to reduce deficit to 4.7% in 2017 then to -1% in 2019.
==Oil production will mitigate the impacts of financial rebalancing==
The World Bank also said that “in 2017- 19, a modest 2.5% increase in hydro-carbon production resulting from the start of production in new oil wells and a positive correction in oil prices will mitigate the negative effect of fiscal and current account consolidation on the real non-oil sectors.”
The World Bank prospects are based on the hypothesis of strong increase of 27% in oil prices in 2017.
Source: World Bank: Algeria’s growth “buoyant” in 2016, to slow down in 2017
