Our comprehensive assessment of Algeria’s operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Algeria, as well as the latest industry developments that could impact Algerian industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Algeria before your competitors.
Algeria Country Risk
The Algerian economy will grow by 3.2% in real terms in 2014 and 3.4% in 2015, on the back of robust domestic demand and public investment activity. Our outlook on the hydrocarbon sector remains more downbeat, and we do not expect a return to growth this year after eight consecutive years of contraction.
We expect Algeria to post its first current account deficit since 1998 this year, remaining in the red for the rest of our ten-year forecast period. Although extensive foreign exchange reserves and an insignificant level of external debt should provide considerable buffers for the time being, the country's deteriorating trade dynamics presents a substantial risk to macroeconomic stability over the longer term.
The victory of Abdelaziz Bouteflika in Algeria's presidential election which took place on April 17 will ensure a...
Algeria Industry Coverage (10)
BMI View: W ith wheat and dairy production consistently short of consumption, Algeria is a major importer of food products. However, the government's new emphasis on the improvement of 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, and away from its traditional suppliers such as France...
Algerian new vehicle sales were down by 28% over H114, at just 180,277 units, according to figures cited by the local French language Motors Magazine. On current sales trends, this would imply a full-year sales figure around BMI's current forecast of 359,179 units. As such, we maintain our sales forecast this quarter, but would caution that downside risks remain, which we outline below.
One main reason behind the calamitous drop in sales is the fact that many Algerians have been looking to rent or buy houses via a national homebuilding scheme being carried out by the Housing Development and Improvement Agency (AADL) which has therefore accounted for most of their disposable income in 2014. Other factors weighing on the near-term outlook for automobile sales in Algeria include: rising congestion in major cities, a lack of parking spaces and the rising costs of owning and running a vehicle.
Food & Drink
Algeria Food & Drink
BMI View: Â We recently revised upwards our forecast s for economic growth in Algeria , and now expect to see nominal GDP growing at a compound annual rate of 10.9% between 2014 and 2018 (up from a previous forecast of 8.3%), as we are more positive about private consu mption , and expect to see strong growth across the food and drinks sector . W e continue to view inflation and political unrest as the biggest risks to consumption.
Headline Industry Data
BMI View: The Algerian construction sector has performed well in 2013 and we see this trend to continue into 2014. After a change of the historical construction data by the Bank of Algeria, from -5.9% year - on - year [y-o-y] to 1.51% y-o-y in 2011, we have revised our outlook of the Algerian construction value to be in line with these modifications. Strong revenues from oil and gas resources and energy exports have allowed the Algerian government to assign US$286bn for investment in infrastructure in five years. Reasonable growth rates and rising oil prices, as well as a period of political stability, in relation to neighbouring countries, are helping to maintain Algeria's inflows of foreign investment. Over the 10-year forecast period we expect average y-o...
BMI View: The limited data that is available suggests that premiums are surging - or, more correctly, recovering from a low base in Libya. The overwhelmingly non-life market of Algeria has also achieved good growth through 2013. However, our overall view of insurance in the region is unchanged from previous years: North Africa remains a backwater. Sadly, this will likely be the case at the end of the forecast period .
To differing degrees, the markets of Morocco, Tunisia and Algeria are small, slowly growing, significantly constrained by the low levels of income for many households and dominated by sub-scale local insurers. Foreign companies are present but, except in Morocco, account for a fairly low percentage of activity. Life insurance, in particular, is underdeveloped. Major shareholders are often state-owned enterprises or conglomerates that have no clear...
Oil & Gas
Algeria Oil & Gas
BMI View: Despite Algeria's substantial hydrocarbons reserves, rapid production decline in the country's major producing fields weighs on its longer-term production outlook. Whilst new projects due online in the coming years will offer temporary support to production growth, we grow increasingly bearish towards the end of our 10-year forec ast period. The high prospectivity of Algeria's unconventional and offshore acreage could see this trend reversed, but a poor above-ground environment continues to drag on international investment.
BMI View: We continue to anticipat e market growth within the petrochemicals sector , although we caution that plans to bring onstream new petrochemicals capacities that promise to transform the sector could be delayed. In 2014, the country is likely to see increased petrochemicals imports .
Our strong outlook for household consumption and fixed investment, combined with Algeria's limited manufacturing industry, means that we seeÂ the country increasingly dependent on finished petrochemical products.Â We expect Algeria's economy to see moderate growth in the coming quarters, underpinned by robust consumer spending and public investment activity. However, difficulties in expanding hydrocarbon exports, combined with high and rising importsÂ mean that we see...
Pharmaceuticals & Healthcare
Algeria Pharmaceuticals & Healthcare
BMI View: Â TheÂ Algerian government 's Â aspirations to rebalance the pharmaceutical trade deficit and promot e local generic produc tion , whilst enhancing the country's competitiveness by stimulating the innovative biopharmaceutical industry as a st rategic sector in the economy, will continue throughout Q414. A new memorandum of understanding between Pharmaceutical Research and Manufacturers of America (PhRMA) and Algeria's government indicates...
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...
BMI View : Other than Libya, which continues to feel the effects of the 2011 civil war, competition is strong in North Africa's Â mobile markets. While there remains some growth potential in the region's mobile markets, BMI believes mobile data and increased liberalisation in the wireline segment will be the major drivers of growth throughout our forecast period to 2018. Morocco's regulator has given incumbent Maroc TÃ©lÃ©com until August to impleme nt local loop unbundling, AlgÃ©rie TÃ©lÃ©com has reduced the price of broadband services to respond to the launch of 3G services in H114 and Tunisie TÃ©lÃ©com has ramped up investment in its...