ECONOMY
The hydrocarbons sector is the backbone of the Algerian economy, accounting for roughly 60% of budget revenues, nearly 30% of GDP, and over 97% of export earnings. Algeria has the ninth-largest reserves of natural gas in the world (2.7% of proven world total) and is the fourth-largest gas exporter; it ranks 14th for oil reserves (2006). Its key oil and gas customers are Italy, Germany, France, the Netherlands, Spain, the United Kingdom, and the United States. U.S. companies have played a major role in developing Algeria's oil and gas sector; of the $5.3 billion (on a historical-cost basis, according to statistics gathered by the U.S. Department of Commerce, Bureau of Economic Analysis) of U.S. investment in Algeria, the vast bulk is in the petroleum sector.
Faced with declining oil revenues and high-debt interest payments at the beginning of the 1990s, Algeria implemented a stringent macroeconomic stabilization program and rescheduled its $7.9 billion Paris Club debt in the mid-1990s. The macroeconomic program has been particularly successful at narrowing the budget deficit and at reducing inflation from of near-30% averages in the mid 1990s to almost single digits in 2000. The government reported an inflation rate of 3.5% in 2008 and an economic growth rate of 4.1%. The country's foreign debt fell from a high of $28 billion in 1999 to $4 billion in 2008. The spike in oil prices at various times this decade, along with the government's tight fiscal policy and positive trade surpluses based on oil exports, have led to a tremendous increase in the country’s foreign exchange reserves, which reached nearly $145 billion in 2008.
The government seeks to diversify the economy by attracting foreign and domestic
investment outside the energy sector, but announced several economic policies in
2008 that would strengthen Algerian Government control over foreign investment
projects. The Algerian Government has had little success at reducing high
unemployment, officially estimated at 10% in January 2009, though international
estimates put the figure much higher, and at improving living standards.
Priority areas are banking and judicial reform, improving the investment environment, partial or complete privatization of state enterprises, and reducing government bureaucracy. The government has privatized or closed some state-owned enterprises in certain sectors of the economy and allowed joint venture investment in others. In 2001, Algeria concluded an Association Agreement with the European Union, which was ratified in 2005 by both Algeria and the EU and took effect in September of that same year. The government is working toward accession to the World Trade Organization.
GDP (2008): $144 billion.
GDP growth rate (2009 est.): 4.13%.
Per capita GDP (2008 est.): $8,300.
Agriculture: Products--wheat, barley, oats, grapes, olives, citrus, fruits; sheep, cattle.
Industry: Types--petroleum, natural gas, light industries, mining, electrical, petrochemical, food processing, pharmaceuticals, cement, seawater desalination.
Sector information as % GDP (2008 est.): Agriculture 8.1%, services 29.4%, industry 62.5%.
Monetary unit: Algerian dinar.
Inflation (2009 est.): 3.5%.
Trade: Exports (2008)--$78.23 billion: petroleum, natural gas, and petroleum products 97.58%. Partners (2008 est.)--U.S. 23.8%, Italy 15.2%, Spain 11.4%, France 8.2%. Imports (2008)--$39.16 billion: capital goods, food and beverages, consumer goods. Partners (2008)--France 16.5%, Italy 11%, China 10%, Spain 7.4%, Germany 5.9%, U.S. 5.6%.
Budget (2008): Revenues--$42.5 billion, expenditures--$75 billion. (2009 est.): Revenues--$42.8 billion, expenditures--$79.8 billion.
Debt (external, December 31, 2008): $4 billion.
U.S. economic assistance (2005 est.): $4.40 million (MEPI, IMET).
