Algeria’s economy showed resilience in the first half of 2025, expanding by 4.1 percent, with GDP growth projected at 3.8 percent for the full year, according to the World Bank’s Fall 2025 Algeria Economic Update. Non-hydrocarbon sectors drove much of this momentum, growing 5.4 percent, while inflation eased to 1.7 percent over the first nine months, supported by lower food prices and a stable exchange rate.
The growth has been sustained by gains in industry and services outside the hydrocarbon sector, although hydrocarbon exports declined and imports rose to meet investment demand. This trend has created some pressure on external accounts, highlighting the ongoing need to mobilize revenues and improve public spending efficiency.
Cemile Hacibeyoglu Ceren, World Bank Group Resident Representative for Algeria, noted that the country can build on these gains by fostering private-sector-led growth that creates quality jobs and encourages innovation. Clear and predictable policies, coupled with measures to attract investment, will be critical to sustaining progress and enhancing competitiveness.
Looking ahead, growth outside hydrocarbons is expected to remain dynamic, though moderate in 2026-2027, with GDP projected at 3.5 percent in 2026 and 3.3 percent in 2027. Continued reforms—especially those that improve the business environment, expand access to finance, and strengthen competition—will be essential to support economic diversification and job creation.
Daniel Prinz, World Bank Economist for Algeria, emphasized that easing price pressures and robust non-hydrocarbon activity provide a strong foundation. “Maintaining this progress through continued reforms can help support stronger, sustainable, and diversified growth,” he said.
The report also highlights the importance of integrating climate considerations into development planning. With partner countries advancing decarbonization, including the European Union’s Carbon Border Adjustment Mechanism (CBAM) set to take effect next year, aligning Algeria’s growth with sustainable practices will be crucial for maintaining competitiveness and ensuring long-term economic resilience.
