Economy

Main article: Economy of Algeria Graphical depiction of the country's exports in 28 colour-coded categories.

Algeria is classified as an upper middle income country by the World Bank. The economy remains dominated by the state, a legacy of the country's socialist post-independence development model. In recent years the Algerian Government has halted the privatization of state-owned industries and imposed restrictions on imports and foreign involvement in its economy.

Algeria has struggled to develop industries outside of hydrocarbons in part because of high costs and an inert state bureaucracy. The government's efforts to diversify the economy by attracting foreign and domestic investment outside the energy sector have done little to reduce high youth unemployment rates or to address housing shortages. The country is facing a number of short-term and medium-term problems, including the need to diversify the economy, strengthen political, economic and financial reforms, improve the business climate and reduce inequalities amongst regions.

A wave of economic protests in February and March 2011 prompted the Algerian Government to offer more than $23 billion in public grants and retroactive salary and benefit increases. Public spending has increased by 27% annually during the past five years. The 2010–14 public-investment programme will cost US$286 billion, 40% of which will go to human development.

The Algerian economy grew by 2.6% in 2011, driven by public spending, in particular in the construction and public-works sector, and by growing internal demand. If hydrocarbons are excluded, growth has been estimated at 4.8%. Growth of 3.1% is expected in 2012, rising to 4.2% in 2013. The rate of inflation was 3.9% and the budget deficit 3% of GDP. The current-account surplus is estimated at 9.3% of GDP and at the end of December 2011, official reserves were put at US$182.2 billion. Inflation, the lowest in the region, has remained stable at 4% on average between 2003 and 2007.

In 2011 Algeria announced a budgetary surplus of $26.93 billion, 62.46% increase in comparison to 2010 surplus. In general, the country exported $73.39 billion worth of commodities while it imported $46.45 billion.

Thanks to strong hydrocarbon revenues, Algeria has a cushion of $173 billion in foreign currency reserves and a large hydrocarbon stabilization fund. In addition, Algeria's external debt is extremely low at about 2% of GDP. The economy remains very dependent on hydrocarbon wealth, and, despite high foreign exchange reserves (US$178 billion, equivalent to three years of imports), current expenditure growth makes Algeria's budget more vulnerable to the risk of prolonged lower hydrocarbon revenues.

In 2011, the agricultural sector and services recorded growth of 10% and 5.3%, respectively. About 14% of the labor force are employed in the agricultural sector. Fiscal policy in 2011 remained expansionist and made it possible to maintain the pace of public investment and to contain the strong demand for jobs and housing.

Algeria has not joined the WTO, despite several years of negotiations.

In March 2006, Russia agreed to erase $4.74 billion of Algeria's Soviet-era debt during a visit by Russian President Vladimir Putin to the country, the first by a Russian leader in half a century. In return, Algerian President Abdelaziz Bouteflika agreed to buy $7.5 billion worth of combat planes, air-defense systems and other arms from Russia, according to the head of Russia's state arms exporter Rosoboronexport.

Hydrocarbons See also: Mining industry of Algeria Refinery located in Sidi Arcine (Baraki, Algiers)

Algeria, whose economy is reliant on petroleum, has been an OPEC member since 1969. Its crude oil production stands at around 1.1 million barrels/day, but it is also a major gas producer and exporter, with important links to Europe. Hydrocarbons have long been the backbone of the economy, accounting for roughly 60% of budget revenues, 30% of GDP, and over 95% of export earnings. Algeria has the 10th-largest reserves of natural gas in the world and is the sixth-largest gas exporter. The U.S. Energy Information Administration reported that in 2005, Algeria had 160 trillion cubic feet (4.5×10^12 m3) of proven natural-gas reserves. It also ranks 16th in oil reserves.

Non-hydrocarbon growth for 2011 was projected at 5%. To cope with social demands, the authorities raised expenditure, especially on basic food support, employment creation, support for SMEs, and higher salaries. High hydrocarbon prices have improved the current account and the already large international reserves position.

Income from oil and gas rose in 2011 as a result of continuing high oil prices, though the trend in production volume is downwards. Production from the oil and gas sector in terms of volume, continues to decline, dropping from 43.2 million tonnes to 32 million tonnes between 2007 and 2011. Nevertheless, the sector accounted for 98% of the total volume of exports in 2011, against 48% in 1962, and 70% of budgetary receipts, or USD 71.4 billion.

The Algerian national oil company is Sonatrach, which plays a key role in all aspects of the oil and natural gas sectors in Algeria. All foreign operators must work in partnership with Sonatrach, which usually has majority ownership in production-sharing agreements.

Labour market

Despite a decline in total unemployment, youth and women unemployment is high. Unemployment particularly affects the young, with a jobless rate of 21.5% among the 15–24 age group.

The overall rate of unemployment was 10% in 2011, but remained higher among young people, with a rate of 21.5% for those aged between 15 and 24. The government strengthened in 2011 the job programmes introduced in 1988, in particular in the framework of the programme to aid those seeking work (Dispositif d'Aide à l'Insertion Professionnelle).

Tourism Main article: Tourism in Algeria

The development of the tourism sector in Algeria had previously been hampered by a lack of facilities, but since 2004 a broad tourism development strategy has been implemented resulting in many hotels of a high modern standard being built.

There are several UNESCO World Heritage Sites in Algeria including Al Qal'a of Beni Hammad, the first capital of the Hammadid empire; Tipasa, a Phoenician and later Roman town; and Djémila and Timgad, both Roman ruins; M'Zab Valley, a limestone valley containing a large urbanized oasis; also the Casbah of Algiers is an important citadel. The only natural World Heritage Sites is the Tassili n'Ajjer, a mountain range.

Transport Main article: Transport in Algeria The main highway relaying the Moroccan to the Tunisian borders, was a part of the Cairo–Dakar Highway project

The Algerian road network is the most dense of the African continent, its length is estimated at 180,000 km of highways, with a rate of more than 3 756 structures and coating of 85%. This network should be complemented by a major highway infrastructure being completed, the East-West Highway. It is a 3-way 1 216 km, linking the city of Annaba in the extreme east to the city of Tlemcen in the far West. Algeria is also crossed by the Trans-Sahara Highway, which is now totally paved. This road is pushed forward by the Algerian Government to increase trade between the six countries crossed (Algeria, Mali, Niger, Nigeria, Chad and Tunisia).