Algeria’s government responded swiftly to public demonstrations at the height of the Arab Spring by granting a series of reforms that appeased protesters. Elevated international energy prices have bolstered the country's fiscal accounts in the past few years, and we do not expect weaker oil prices to lead to a fundamental turnaround in the government's expansionary fiscal policy. Investments into the oil and gas sector continue to be prioritised by Algeria’s government.
We keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 10 of Algeria’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert teams. We aim to keep you ahead of the curve, so you can do business with ease in Algeria.
Algeria Country Risk
Although Algeria is now turning to austerity, the country's remaining fiscal buffers will help to delay a more dramatic fiscal and economic adjustment. However, the next few years will see subdued growth and rising macroeconomic challenges. We forecast real growth to slow to 1.9% this year, down from an annualised 3.3% between 2010 and 2014.
The Algerian dinar will continue to gradually weaken against the US dollar throughout 2016, albeit at a slower pace. Oil prices are not set for a quick recovery, and the trade fundamentals of Algeria's economy remain bleak - factors that will weigh on the currency. However, the government will be reluctant to permit too great a slide of the dinar as pressures on households rise.
While lower oil prices will put further pressure on the Algerian regime over the coming years, we...
Algeria Industry Coverage (10)
BMI View: Algeria will be unable to feed its growing levels of wheat and milk consumption as the country remains a major importer of food products. However, the government's new emphasis on the improvement of food self-sufficiency is helping to revive the sectors. While higher government support is likely to be positive for productivity and product quality in the medium term, Algeria will remain a key importer of wheat and dairy products in the coming years. The country is increasingly expanding trading...
BMI View: This quarter, we have become yet more negative on the outlook for the Algerian new vehicle sales market. We have revised down our 2016 sales forecast to a contraction of 65.0%.
|Passenger Car And Light Commercial Vehicle Sales|
|e/f = BMI estimate/forecast. Source: AC2A, BMI|
Tough import restrictions and a slowing economy are both posing challenges for the Algerian new...
Food & Drink
Algeria Food & Drink
BMI View: We forecast positive growth in Algeria's food and drink industry, led by strong growth of 30.0% on average per year to 2019 in the MGR sector. As MGR grows from a low base, we forecast that growth will be fuelled by positive foreign investment and strong domestic players. We forecast modest growth for food consumption as the government plans to hike taxes and import duties to increase local production. In the short-to-medium term we expect growth to be subdued as the government works on freeing up regulations for the private sector.
Headline Industry Data (local currency)
BMI View : Falling global oil prices have had a huge impact of government revenues in Algeria, in turn resulting in delays to major public infrastructure projects and a downturn in private investor interest in the leading oil and gas sector. The country's large infrastructure deficit, particularly in terms of residential and social infrastructure, will ensure some level of growth is maintained over the forecast period. Similarly, government moves to diversify the economy by expanding domestic production/manufacturing capacity and establishing a position as a regional trade hub will attract some level of investment, particularly from increasingly important economic and trading partner China.
Forecasts and Latest Updates
BMI View: We retain the view that the Moroccan and Algerian markets are both set to see solid premium growth in their insurance industries over the course of our forecast period out to 2020. Key drivers underpinning growth will be the strengthening of the countries' broader economic prospects, as this will lead to improved employment rates and a significant growth in disposable household income levels, resulting in increased affordability of insurance solutions. The expansion of bancassurance distribution channels and new product development, such as takaful and microinsurance in particular, will enable insurers to reach the countries' growing customer pools.
Oil & Gas
Algeria Oil & Gas
BMI View: The outlook on Algerian oil production is heavily bearish, due to rapid decline rates at mature producing fields and the small pipeline of projects currently under development. The outlook on gas is slightly more positive, although strong domestic consumption growth will continue to weigh on exports. Reversing longer-term production declines depends on pulling increased foreign investment into the sector. However, the prospects here are clouded by an unattractive fiscal and regulatory regime and the weakened commodity price environment.
BMI View: The Algerian petrochemicals market will continue to come under pressure in 2016 as a result of slowing economic activity caused by falling oil prices. In addition, the local petrochemicals industry is unlikely to expand significantly, with investment largely focused on fertilisers.
In 2015, the fertiliser sector was the focus of expansion in 2015. Production is supported by the opening in H1 of Sonatrach's joint venture with Oman's Suhail Bahwan Holding Group, Al Djazairia Al Omania Lil Asmida (AOA), which was built at a cost of USD2.6bn and produces ammonia and urea for fertiliser. AOA has a capacity of 2.4mn tonnes per annum (tpa), leading to an increase in national production by about one-third. The...
Pharmaceuticals & Healthcare
Algeria Pharmaceuticals & Healthcare
BMI View: Algeria's large and growing healthcare and pharmaceutical market will continue to drive interest from multinational drugmakers over the forecast period. Meanwhile, Algeria's pharmaceutical exports will continue to expand as the country gradually strengthens its position as a key drug manufacturing hub in the Middle East and Africa region. Import restrictions and market access barriers are set to benefit drugmakers that engage in domestic production or joint ventures with local manufacturers, although the Algerian market will remain dependent on imported high-end pharmaceuticals given limited local production capacity for these products.
Headline Expenditure Projections
BMI View: Algeria has ambitious investment programme over 2015-2024, which will be driving strong gas generation growth. Historically strong gas-fired generation growth rates are supportive of further steady capacity growth, additionally the political situation is relatively stable and Algeria brought a sizeable 460MW Biskra gas plant online ahead of schedule last year. BMI considers these to be positive signs to spur the gas capacity growth.
Algerian state-owned incumbent Sonulgaz is aiming to build nearly 28GW of new capacity by 2025. The utility claims that 15.4GW of this capacity has already been allocated and over the next three years 14.2GW of new capacity will come online, most of which will be gas-fired. BMI has a fairly bullish view on this capacity coming online. Despite...
BMI View : The North African telecoms sector continues evolving from comprising primarily of voice-centric markets towards markets driven by data consumption. Mobile broadband is increasingly becoming one of the core drivers and offers the greatest future growth opportunities. 3G services have been successfully launched in Algeria and Tunisia, and the 4G services licensing and deployment is now underway in both markets. However, demand for these services still depends on the macroeconomic situation: higher purchasing power helps with the...