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 (11)

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 project real private consumption growth of 5.0% in 2015, down from an annualised rate of 5.5% in 2009-13. 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, the dinar's depreciation and weaker consumer confidence present new headwinds. Consumer price inflation is set to pick up, putting pressure on disposable incomes. We forecast inflation to average 4.0% in annual terms in 2015, after a relatively low rate - by Algerian standards - of 2.9% over 2014.

Headline Industry Data (local currency)

  • 2015 per capita food consumption year-on-year (y-o-...

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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 : We see significant potential in North Africa for insurers. However, continued economic constraints will hamper the full development of the sector over the short term, particularly the non-life segment. That being said, strong government impetus in much of the region to augment health insurance density will boost penetration over the medium term. However, we continue to expect life insurance will underperform in comparison to non-life insurance, owing to the disinclination among much of the population to purchase life insurance policies when household budgets are tight....

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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: Rapid depletion at major maturing fields and a lack of new projects slated to come online will drag Algerian oil and gas output into decline, in the second half of our 10-year forecast period. Our bearish outlook is compounded by the sharp fall in global oil prices which - alongside a weak above-ground environment - will severely undercut prospective investments in the sector. We forecast a rapid in rise in domestic oil and gas consumption, fuelled by continued high level subsidisation, which will put increasing strain on the country's export volumes towards the end of the decade.

Headline Forecasts (Algeria 2013-2019)
2013e 2014e ...

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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.

Petrochemicals have major potential as Algeria looks to reduce its reliance on raw commodity prices. Its main value-added products are methanol and fertiliser. Petrochemical exports amount to around two-thirds of Algeria's non-hydrocarbons exports, but hydrocarbons comprise 95% of the country's total exports. Algeria has the fourth-largest oil reserves and second-largest gas reserves in Africa but production has plateaued in recent years.

However, we believe that Algeria is unlikely to...

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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: Despite Algerian government's efforts to spur the development of renewable energy in the country, conventional thermal sources are expected to remain the dominant fuel for electricity generation in the coming years, with many power projects under construction or planned that will use natural gas. We estimate 2013 total power generation in Algeria was 50.4TWh, having risen 3.8% on the 2012 level. We forecast an average 4.7% annual increase to 60.9TWh between 2012 and 2017. Thermal generation, comprising coal, gas and oil, is expected to grow at a similar pace - by 4.7% per annum and is forecast to reach 60.3TWh during the period to 2017.

We forecast Algeria's power consumption to...

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Telecommunications

Algeria Telecommunications

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BMI View : North Africa's telecommunications markets are on the cusp of change, with the licensing of 4G LTE services at the forefront of this change. 4G licences were auctioned and issued to the three existing players in Morocco in March 2015, while the authorities in Tunisia are fast-tracking the licensing of 4G with a view to seeing services launched commercially in 2016. LTE technology is already being deployed in Algeria, which is unexpected seeing as that country has historically lagged its neighbours. Increased state control over the three mobile operators in Algeria remains a concern, however. Libya is still left out of this development trend, with insecurity and political stability delaying a much...

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