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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  • 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 falling consistently short of consumption, Algeria is a major importer of food products. However, the government's new emphasis on improving food self-sufficiency is helping the grains and dairy sectors to rebound. Increases in government support will be positive for productivity and product quality in the medium term. However, the country 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, especially for dairy and beef products,...

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Autos

Algeria Autos

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This quarter, BMI has become more negative on the near-term outlook for Algerian new vehicle sales. We are now targeting an 8% decline in new vehicle sales in 2015 (down from 2% growth previously), as a slowing economy and rising inflation both weigh on private consumption over the coming months.

Q115 sales appear to have set the tone for the year. New car sales fell by 1.1% year-on-year (y-o-y) in January, then by 20% y-o-y in February, before recovering slightly to an 8.2% annual fall in March. This made for total Q115 sales of 86,181 units, down by 9% on Q114's sales of 94,709 units.

A further negative signal has been sent from the country's Customs Department, which reported that the total value of new vehicle imports fell by 17.8% y-o-y over Q115, to DZD1.3bn. In unit terms, total new vehicle imports fell by 19% y-o-y, to 95,075 units. According to the same trade statistics,...

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Food & Drink

Algeria Food & Drink

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BMI View: We now 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 to 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: Morocco's insurance sector should achieve steady, single digit growth during the forecast period. This is substantially due to the steady growth in the economy, which should boost most sub-sectors of the non-life segment and the life segment as a whole. Particular sub-sectors of the non-life segment should also receive a boost from the introduction of compulsory lines. However, the comparatively slow growth of the important (but stable and profitable) market for motor vehicle insurance will hold back the overall growth in premiums in Morocco. In Algeria, the key development is the near certain rise in motor vehicle insurance rates. The line has been unprofitable, and the insurers are taking steps to address this. Other sub-sectors of Algeria's non-life segment should benefit from steady...

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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)
2013 2014e 2015f

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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: Long-term growth prospects in Algeria's pharmaceutical and healthcare sector will continue to generate investment opportunities to foreign firms, including in the development of drug manufacturing capacity and technology transfer with joint partnerships with local firms. Also, investment and commercial opportunities will be boosted by healthcare facilities construction and modernisation. In its efforts to diversify the economy away from hydrocarbons, the Algerian government will continue to promote the development of the pharmaceutical sector as a potential regional hub...

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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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