Algeria

In-depth country-focused analysis on Algeria’s economic, political and operational risk environment, complemented by detailed sector insight

Algeria

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.

Country Risk

Algeria Country Risk

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Core Views

  • As a result of ongoing political violence, a significant degree of productive capacity (both physical and human) throughout the Libyan economy has been lost. Road, housing and utility infrastructure have suffered considerable damage and will take years to repair under even the most stable of political environments. Moreover, given the importance of the hydrocarbon industry, damage to oil production and refining infrastructure will pose significant long-term challenges.

  • Libya's political climate will remain volatile through 2015, as competing militias compete for control over the country's vast resource wealth.

  • A lack of institutional capacity will hamper reconstruction efforts. Libya lacks the institutions necessary to carry out much-needed investment projects.

  • Low oil prices,...

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Algeria Industry Coverage (10)

Agribusiness

Algeria Agribusiness

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BMI View: With wheat and dairy production systematically short of consumption, Algeria is a major importer of food products. However, the government's new emphasis on the improvement of food self-sufficiency is helping the grains and dairy sectors revive. Higher government support should be positive for productivity and product quality in the medium term. But Algeria will remain a key importer of wheat and dairy products in the coming years. Algeria is increasingly expanding trading links with countries such as Brazil and India, away from its traditional suppliers such as France, especially for dairy and beef products.

Agribusiness Market Value
BMI Market Value By Commodity (2011-2019)
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Autos

Algeria Autos

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The near-term outlook for Algerian new vehicle sales has become even more negative over the past quarter, partly as a result of new vehicle import regulations introduced in April 2015 that have reduced the amount of imported vehicles that are passed as suitable for sale on Algerian roads by the local authorities. These new import regulations have also reportedly had the by-product of local banks being told by the government not to accept non-compliant vehicles as suitable for delivery to local dealerships, which has led to a situation where there could be as many as 40,000 vehicles currently impounded in Algerian ports waiting for clearance, according to local media reports.

BMI was already forecasting an 8% decline in new vehicle sales for 2015. However, given recent poor monthly sales data and uncertainty over these new import regulations and when the effective blockade of auto imports will be lifted, we are now...

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Food & Drink

Algeria Food & Drink

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BMI View: We project real private consumption growth of 4.2% in 2015, down from 5.0% previously, as the dinar's depreciation and weaker consumer confidence present new headwinds. While favourable demographics and the state's continuing support for household incomes (through transfers, subsidies and public sector jobs) will help to prop up consumer goods purchases, consumer price inflation is set to pick up, putting pressure on disposable incomes. We forecast inflation to average 5.5% in annual terms in 2015, after a relatively low rate - by Algerian standards - of 2.9% over 2014....

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Infrastructure

Algeria Infrastructure

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BMI View: Algeria's construction sector saw relatively healthy growth in 2014, and with an uptick in GDP growth forecast in 2015 we expect this trend to continue moving forward. The government is launching an extensive new five-year development programme, including wide-ranging investments across a number of public infrastructure projects, with USD262bn due to be allocated. Prime Minister Abdelmalek Sellal has also reiterated a commitment to encouraging more foreign investment, indicating a range of opportunities for international firms. Despite a contraction in the oil and gas sector, Algeria's large reserves mean we expect to see public spending continue to rise, supporting our positive growth forecasts for the country's construction sector.

The key trends and developments in Algeria's infrastructure sector are:  

  • Construction industry value is expected to grow...

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Insurance

Algeria Insurance

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BMI View: Both Morocco and Algeria are expected to see insurance premiums grow at a steady rate over our forecast period through to end-2019. In both cases we are looking for demand for life and non-life covers to grow in line with steady expansion in GDP and rising household incomes. While Morocco's insurance sector remains significantly more developed than that of its neighbour, both markets share similarities in terms of being dominated, to a lager extent, by a small number of indigenous providers. However, both markets are becoming increasingly open to competition from abroad, a trend which should lead to the development of new products and distribution platforms and hence increased penetration across both markets.

Morocco...

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Oil & Gas

Algeria Oil & Gas

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BMI View: Given the heavy investment needed to offset rapid declines at its major maturing fields, we see Algeria as among those producers most vulnerable to the global fall in oil prices. Softer prices will combine with the country's weak above-ground environment to ward off prospective investors. Falling production combined with high consumption growth for both oil and gas will put a heavy strain on exports towards the back end of our 10-year forecast period.

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Headline Forecasts (Algeria 2013-2019)
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Petrochemicals

Algeria Petrochemicals

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BMI View: The Algerian petrochemicals market will come under pressure in 2015 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.

The fertiliser sector is 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 launch of the AOA plant follows the announcement of modernisation and expansion plans at two other large ammonia and...

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Pharmaceuticals & Healthcare

Algeria Pharmaceuticals & Healthcare

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BMI View: Algeria's growing domestic pharmaceutical sector and restrictions on imports will result in the country importing a smaller proportion of its medicines over the long term. Foreign drugmakers that engage in local manufacturing and joint ventures with domestic firms will benefit from government incentives and be able to expand their market share in a large and growing market. Despite the negative impact of weak global energy prices on Algeria's economy, public spending, which is the backbone of the economy, will sustain its commitment to the development and modernisation of the health sector, including through multiple infrastructure projects. However, economic vulnerabilities associated to the energy sector and a challenging business environment will continue to weigh on the country's full potential.

Headline Expenditure Projections

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Power

Algeria Power

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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...

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Telecommunications

Algeria Telecommunications

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BMI View : Markets in North Africa are quickly evolving from being voice-centric towards becoming data-centric, with mobile broadband being the core driver in all markets. 3G services have been launched with success in Morocco, Algeria and Tunisia, and the licensing and roll-out of 4G services is also on track. Success is dependent on the overall macroeconomic situation, with higher purchasing power helping with the development of the telecoms market, while the security situation is always at the forefront in the region. All markets have a mix of public and private operators, though liberalisation is not present in all sectors, and the competition has always driven greater uptake in the region...

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Latest Algeria Articles

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