- Economic growth in Algeria has reached new heights after some slow years around the turning millennium. Growth in 2003 was at 6.7 percent, new data provided by the Algerian authorities show. The country's very high unemployment rate is finally projected to drop.
Algeria has experienced solid economic growth during the last six years, although the situation around year 2000 - with a growth rate of 2.2 percent - looked rather pessimistic. Since that, real GDP has been growing faster each year, reaching 4.1 percent in 2002 and 6.7 percent in 2003.
These positive numbers are revealed by the latest surveillance over the economic policies of Algeria, published today by the International Monetary Fund (IMF). "GDP growth has strongly recovered from its slowdown in 2000," the Fund concluded in its review of Algeria's economy.
- Despite volatile oil markets and a difficult political and social environment, Algeria has maintained macroeconomic stability, the IMF study found. "While growth in 2002 was limited by weak agricultural production as a result of adverse weather conditions, it was boosted by an exceptional harvest and a strong hydrocarbon sector performance in 2003."
Finally, the Fund also expected that economic growth would produce improved conditions for Algeria's working force. An estimated at 25.9 percent of Algerians are currently unemployed, according to the latest available data. "Against this background, the high unemployment rate is projected to drop," IMF concluded.
This is indeed good news for Algerians, as the very high unemployment rate - especially affecting the youth - always has been seen in connection with the country's political instability, the rise of extremism and the spread of violence. Higher employment rates, analysts hold, would bring political stability and thus even an enhanced economic growth.
Also IMF executives today welcomed the strengthening of Algeria's economic performance over 2002 and 2003, "with high economic growth, low inflation, a marked strengthening of the balance of payments, and an accumulation of international official reserves."
According to the IMF directors, these achievements were largely attributable to a combination of strong agriculture performance - boosted by favourable weather conditions - continued high oil prices and supportive fiscal policies. "Progress has also continued to be made in some structural areas, the Fund noted, including trade liberalisation.
While growth prospects were said to remain favourable in the period immediately ahead, IMF directors in their analysis underscored that "the Algerian economy continues to face serious challenges."
- Despite some decline recently, unemployment remains high, and the rise in living standards is still slow, the study found. To achieve sustained, job-creating growth, the IMF held that "Algeria will need to reinvigorate structural and institutional reforms aimed at significantly increasing the role of the private sector in the economy."
Algeria's "pressing social and infrastructure needs" would continue to call for "high levels of investment in the coming years," the IMF concluded. At the same time, however, the IMF cautioned that the high level of public spending - currently made possible by high oil prices - also entailed many risks.
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