Algeria’s Economy Grows 4.8% in 2024 as Reforms and Consumption Drive Momentum

“Algeria’s growth path continues to be solid. However, the fiscal and external balance remain highly sensitive to oil and gas prices,” said Kamel Braham, World Bank Resident Representative for Algeria.

Algeria’s economy sustained its upward trajectory in 2024, with non-hydrocarbon GDP expanding by 4.8%, according to the World Bank’s latest economic update. The growth was largely fueled by strong public investment and resilient household consumption, even as the hydrocarbon sector experienced a temporary decline.

This solid performance comes amid broader efforts by Algerian authorities to diversify the economy, strengthen macroeconomic stability, and reduce dependence on the volatile oil and gas sector. The World Bank emphasized that inflation dropped significantly to 4.0% in 2024—thanks in part to an unexpectedly strong agricultural season, which helped ease food prices despite limited rainfall.

“Algeria’s growth path continues to be solid. However, the fiscal and external balance remain highly sensitive to oil and gas prices,” said Kamel Braham, World Bank Resident Representative for Algeria.

Real GDP to Slow in 2025 Amid Sector Shifts

Looking ahead, real GDP growth is projected to moderate to 3.3% in 2025. This anticipated slowdown reflects a gradual recovery in extractive industries—particularly oil and gas—but also a consolidation of public investment, which had been a major growth engine in 2024.

The World Bank warns that low global oil prices could pose a major risk, potentially triggering larger fiscal and external deficits in 2025. Already, Algeria has seen a modest return to current account deficits, driven by rising imports and a temporary contraction in hydrocarbon output. These trends have also led to a decline in foreign exchange reserves and a widening fiscal deficit.

Structural Transformation Needed for Long-Term Resilience

To build a more resilient and sustainable growth model, the World Bank report calls for accelerated structural reforms aimed at diversifying the economic base, enhancing productivity, and reducing Algeria’s heavy reliance on hydrocarbons.

“Productivity gains, particularly in manufacturing and services, are essential to unlock Algeria’s growth potential,” noted Cyril Desponts, Senior Economist for Algeria.

The report recommends a comprehensive strategy that includes:

• Rebalancing the fiscal framework gradually to improve efficiency and reduce dependence on volatile revenue streams.

• Boosting private sector investment by improving the regulatory environment, reducing bureaucratic barriers, and encouraging entrepreneurship.

• Shifting employment toward higher-value-added sectors, including light manufacturing, information technology, and specialized services.

• Strengthening human capital, with investments in education, vocational training, and innovation hubs to align workforce skills with future market needs.

• Promoting foreign direct investment (FDI) to facilitate the transfer of technology, best practices, and productivity-enhancing management systems.

These policy interventions, the report suggests, are key to ensuring Algeria’s graduation from a middle-income economy to high-income status, especially in the context of long-term global shifts toward green energy and digital innovation.

A Fragile External Balance

While Algeria’s public finances remain relatively manageable, the external sector is under pressure. The current account deficit, although modest, reflects the country’s vulnerability to commodity price swings. Algeria’s hydrocarbons account for over 90% of export revenues and are a primary source of foreign currency.

As energy prices face potential volatility amid global transitions to renewable sources, the report underscores the importance of expanding non-oil exports, investing in renewable energy infrastructure, and developing value chains in agriculture and light industry.

Opportunities for Inclusive and Green Growth

Algeria's push for economic transformation coincides with a broader ambition to ensure that growth is inclusive, equitable, and environmentally sustainable. With a youthful population and strategic geographic location, the country is well-positioned to become a regional hub for trade, innovation, and green development—provided the right policy foundations are in place.

The World Bank suggests aligning Algeria’s national development plans with climate resilience goals and sustainable infrastructure investments, to create jobs while reducing environmental risks. Additionally, improved governance, transparency, and digital transformation of public services are cited as essential to increasing investor confidence and social trust.

Path Forward

Algeria’s economy has shown strong underlying momentum in 2024, bolstered by public investment and resilient domestic demand. However, the path to sustainable growth will depend on continued reform, fiscal prudence, and strategic private sector engagement. The World Bank’s update is both an endorsement of recent progress and a call to action: Algeria must accelerate its economic transformation to navigate future uncertainties and achieve its full potential.