Algeria Economy

Algeria Economy

ECONOMY: GENERAL INFORMATION

From an economic point of view, Algeria presents itself as one of the most dynamic countries on the African continent. During the French colonization the economy was set up according to the needs and advantages of the colonists, without reaching even the slightest integration with the internal reality, on the contrary creating those imbalances that with independence came forcefully to light. Agriculture, especially developed on the basis of French interests during the colonial period, forced, after 1962, the government of Algiers to concentrate its efforts on achieving the total conversion of the sector: the colonial crops and those started to exports (especially wine) and food, such as cereals, destined for internal consumption increased. A few thousand cooperatives were set up, located in the villages that had sprung up on the lands expropriated from the French colonists; moreover he began a vast work of reclamation of the lands taken from the desert. This phase known as the “agricultural revolution” officially ended in 1980 without having achieved the desired results. In addition to the reorganization of the agricultural sector, the priority of the state, immediately after independence, was to create a national industry. Heavy industry was initially favored, followed by a period in which large plants were created, and then, finally, moving on to support small and medium-sized enterprises. Even the industrial plans, like the agricultural ones, changed in the 1980s when the economic situation worsened considerably. Well endowed with mineral reserves (oil and natural gas, above all) Algeria was affected by the collapse in the price of oil and natural gas on world markets and for the country a phase of acute recession began, which led to a steep increase in debt abroad (30,921 million US dollars in 1997) and the spread of profound discontent. The serious political crisis triggered by the emergence of Islamic fundamentalism was added to the difficult economic situation. Starting from the second half of the eighties of the century. XX, according to indexdotcom, Algeria progressively abandoned the principles of the socialist economy which it had inspired since independence and initiated a process of economic liberalization which favored privatization and foreign investments also in the hydrocarbon sector. 2001 marked the start of economic growth: despite the heavy demographic push, the country managed to bring the percentage of unemployed down from 30% (2001) to 13% (2006); the GDP per capita is growing (US $ 4,238 in 2017) even if poverty remains one of Algeria’s unsolved problems. Thanks to the large availability of natural resources and the huge revenues deriving from the sale of gas and oil, the country recorded a GDP of US $ 180,441 million in 2018. Since 2014, the drop in the price of hydrocarbons has reduced revenues and made the current account negative; the government raised some taxes and introduced disincentives to imports, but failed to prevent a sharp increase in the deficit and the rapid reduction of the stabilization fund fueled by oil revenues. The rigid and statist economic structure does not favor diversification, makes it difficult to deal with the burdensome system of subsidies and does not contribute to reducing high youth unemployment.

Algeria Economy

ECONOMY: AGRICULTURE, FORESTRY, LIVESTOCK AND FISHING

With all its shortcomings, and although arable and arborescent crops occupy just over 3% of the territorial surface and contribute only for approx. 12% to the formation of the national product, agriculture commits approx. 10% of active labor. Commercial agriculture is represented by the vine, then by the olive tree, by citrus fruits, by the first fruits and by various Mediterranean fruit-bearing plants that occupy the plains and hilly areas of the Tell, lands that the French had transformed on the model of the countryside of the motherland; Algeria is one of the main producers of dates. Traditional Algerian agriculture – also practiced by modern farms – mainly supplies wheat, barley and other cereals, as well as figs in Kabylia. Wine production is important. § Small is the wooded area; main essences are Aleppo pine, cork oak, cedar; on the highlands the alpha, used in papermaking. § The extensive and sometimes nomadic breeding of sheep and goats, less commonly of cattle, is part of the traditional forms of economy. Camel breeding is widespread in desert areas. § The fishing sector is penalized by the lack of adequate infrastructures, but is constantly stimulated by the demand for food. However, at the beginning of the 2000s the sector reached the production of neighboring Tunisia.

ECONOMY: INDUSTRY AND MINERAL RESOURCES

Industry contributes over 60% to the formation of GDP. Hydrocarbons are the basis of the national industry: the main activities are the refining of oil, the liquefaction of natural gas and the processing of phosphates and iron ores. The main sectors are therefore the steel industry, heavy chemicals (whose most important plants are located in Annaba, Arziw and Skikda); there are also factories of cement and building materials and those of paper pulp. The country also has textile, food and brewery plants. Strong impetus was given to the economy by construction companies and public works. The handicraft produces goldsmith works, ceramics and carpets. § As has been said, the main and indispensable element of the economy of Algeria are hydrocarbons. Oil fields are mainly found in the large oil fields of Hassi Messaoud, Edjeleh del Shaara; natural gas is extracted mainly in In Salah, also in the Sahara. A complex network of oil and gas pipelines (approx. 10,000 km) transport oil and natural gas to the ports of Arziw, Béjaïa, Skikda and the Tunisian port of Skhira. From Hassi R’Mel gas pipelines leave for the Algerian coast (Arzew) and for Mazara del Vallo, in Italy, through Tunisia and the Strait of Sicily.

ECONOMY: TRADE, COMMUNICATIONS AND TOURISM

In Algeria, the export of oil and gas produces 95% of the proceeds from exports; the other products participate only marginally in exports, including semi-finished products and raw materials. The country imports industrial and agricultural goods: despite the intervention programs in the primary sector, food imports continue to be substantial. The trade balance (2018) is passive. The main trading partners for exports are the United States, Spain, France and Canada; Algeria, on the other hand, imports products mainly from France and Italy. § The ways of communication are insufficient; the road network extended in 2010 for 113,655 km, of which, however, over two thirds were asphalted. The Maghreb has a decent railway network with a coastline connecting the Algeria with Morocco and Tunisia and from which branches branch off towards the internal plateaus; the Sahara is crossed by two roads also beaten by a moderate tourist traffic, which seeks a reason to escape from the majesty of the desert.