This focus describes the economic and political situation in Algeria, with a decidedly slant aimed at consultancy for businesses, energy and more.
The President Abdelaziz Bouteflika, in office since 1999, obtained his fourth five-year mandate in the presidential elections last April, but his precarious health conditions lead to fears that he will not be able to complete the new term. Concerns about his succession are therefore growing. North African countries, such as theAlgeria , Libya, characterized by high youth unemployment, underdevelopment of peripheral areas and strong corruption, represent fertile ground for the islamic terrorism.
Algeria, with a GDP nominal at $211 billion in 2013, it is the region's largest economy Maghreb (region which also includes Mauritania, Morocco, Libya and Tunisia). According to analysts of Intesa Sanpaolo, in 2014 GDP growth will settle at 4%, from 2,5% in the previous year, thanks to the positive contribution of extraction activities (+0,5%). The sector of hydrocarbons was able to benefit from the opening of new gas extraction sites, which more than offset the drop in average oil production (-2,5% per day).
The part non-hydrocarbons instead, the economy recorded a slowdown (-1,6%) compared to 2013, despite its dynamics closing the year positively (+5,5%). Down the primary sector and public investments, after strong growth in previous years. In fact, construction was the most dynamic sector, with average growth rates close to 10%, followed by services, mainly transport, communication and commercial distribution.
After a year of electoral campaign, which led to wage increases in the public sector, theinflation, from 3,3% in 2013 to 2,7% in 2014, thus favoring the private consumption of Algerian citizens. Instead, the private investments thanks to foreign capital invested in the gas and automotive industries. In the 2015 the new five-year development plan has started 63 billion of public investment in the real estate sector e 17,8 billion in infrastructure, financed mostly by proceeds from the sale of gas and oil. Despite the state oil company, Sonatrach, has declared that it will not reduce its investment plan, in 2015 a decline is expected in the hydrocarbon sector (around 5%), due to the lower contribution of foreign companies. This will inevitably also weigh on GDP.
THEAlgerian economy, unfortunately, depends heavily on the extraction of gas e Petroleum. To date, the hydrocarbon sector accounts for 35% of total GDP in real terms and 38,8% in nominal terms (2013 data). Gas and oil also contribute 98% of the total exports and about 60% of tax revenues. However, the exhaustibility of energy sources suggests the urgency for Algeria to diversify own business and make investments in alternative energy sources. In fact, Algeria's oil reserves are destined to run out within 20 years and those of gas within 57.
The main industries of the country are thefeed, mechanics, the building materials, metalworking, petrochemicals and textile. In some cases they are real excellences, but the widespread presence of the State, combined with the problems of public order linked to the terrorism, have held back the growth of the private sector. In other words, Algeria today is not very competitive and little “business oriented”. A 2009 law even limits the presence of foreign capital in companies al 49%. No wonder, therefore, if the IDE they represent only 1% of GDP; a data which is well below the average of the Maghreb area.
The official uniform, the dinar, depreciated by 12,3% on dollar, which is the currency in which almost all exports and a large part of imports are invoiced. In the last year the public deficit, according to estimates by IMF, has increased in relation to GDP to reach 7,5%. To finance this deficit, Algeria can draw on the sums set aside in the oil stabilization fund "Fonds de Regulation des Recipes"(FRR), which had a capitalization of approximately $2014 billion in January 77.
The high price of oil, much higher than the current quotations on the international market, highlights the need, in Algeria, for interventions fiscal consolidation, otherwise the reduction in revenues from hydrocarbons and the sustained demand for imported goods, expected for 2015, will lead to the negative balance of the public budget.
Algeria, despite boasting a strategic position among the Mediterranean countries, both for its hydrocarbon endowments and for accessibility to the European market, it seems unable to exploit the competitive advantages it has. The main causes of this inability are the autarkic regime established by President Bouteflika and thepolitical instability, recently aggravated by the fear of the war being fought on the outskirts of the country, between the self-proclaimed State ofISIS and Libyan troops. At present, Algeria is unable to compete internationally.
The country needs structural reforms in terms of corruption e liberalization of sectors in the hands of state enterprises. The watchword is "Do ut Des”. If the government is able to put reform efforts into practice, foreign companies will once again invest in the country and trust the institutions that govern it.
