Country Report Algeria December 2008

Outlook for 2009-10

• The president, Abdelaziz Bouteflika, will stand for a third term in April 2009 following several amendments to the constitution that were approved by parliament in November. He is likely to win the election by a large majority.
• The threat to general security from the militant Islamist insurgency is likely to remain high in the near term, following a recent increase in bomb attacks against official targets. This is not likely to affect overall political stability.
• Fiscal policy will remain strongly expansionary. However, low oil prices in 2009-10 are forecast to lead to a narrowing of the budget surplus to around 2% of GDP in both 2009 and 2010.
• Domestic demand will remain robust, but an expected slowdown in investment in Algeria has led us to lower our forecasts for real GDP growth to 4.1% in 2009 and 5.3% in 2010, insufficient to reduce unemployment significantly.
• The Algerian dinar is likely to depreciate on average against the US dollar in 2009-10. Against the euro, the dinar is forecast to appreciate in 2009.
• Lower oil prices will lead to a sharp drop in Algeria's trade surplus, to around US$23.4bn in 2009 from an estimated US$40bn in 2008. This will result in a concomitant reduction in the current-account surplus.

Monthly review

• The joint houses of parliament approved a number of proposed changes to the constitution by an overwhelming majority on November 12th.
• The president, Mr Bouteflika, described the vote as a "day of glory" for Algeria, whereas the secretary-general of the opposition Rassemblement pour la culture et la democratie called it a "black day".
• Militant Islamist activities have continued. On November 5th Fateh Bouchibane, the mayor of Timezrit in the Kabylia region, was abducted and killed by a "terrorist" group, according to the Ministry of the Interior.
• In response to some delays with the government's infrastructure programme to boost growth, the government has put together an "action plan" to ensure that several projects are completed before the presidential election.
• During Algeria's fourth annual energy conference, held in mid-November, the state hydrocarbons company, Sonatrach, reiterated its ambition to step up upstream oil and gas exploration despite the global economic downturn.
• At the energy conference, Nourredine Boutarfa, the head of the state power company, Sonelgaz, announced that the company will spend almost US$30bn on the expansion and upgrade of Algeria's electricity infrastructure until 2017.
• The IMF has estimated that real GDP growth was 3% in 2008.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60
NAICS Code: 52