The country has the eighth-largest reserves of natural gas in the world and is the fourth-largest gas exporter. Within North Africa, Algeria dominates the energy market with 50 percent of natural gas reserves and 94 percent of exports. Its deposits of gold, iron ore, phosphates, uranium, lead, zinc and other minerals are also substantial. The country’s hydrocarbons sector remains the backbone of the economy, accounting for roughly 60 percent of its budget revenues, 30 percent of its GDP, and over 95 percent of its export earnings. Due to its vast variety of natural resources, Algeria is expected to enjoy high growth potential.

The country enjoys foreign currency reserves of about $150 billion, which is roughly equivalent to its gross domestic product. The reserves enable the economy to weather the short-term market fluctuations in the price of oil and gas.

“Economic growth will decrease slightly to 4 percent against the 4.6 percent contained in the original budget law because of a decline in demand for gas on the world market,” The country’s Finance Minister Karim Djoudi, said in parliament in September, according to a Reuters report on 21 September 2010. The minister also said non-oil growth is expected to reach 6 percent in 2010.

The Economist Intelligence Unit (EIU) observed that Algeria is committed to a large five-year investment programme aimed at developing the skills base and improving infrastructure in the country. Real GDP growth is set to average 4.1% in 2011-15 on the back of government spending and investments in the energy sector.

Weak demand in Europe for hydrocarbons and lower gas output will act as a damper on growth. Banque d’Algerie, the central bank, operates a managed float of the Algerian dinar. This is expected to gain ground on the euro in the forecast period, making imports of food in particular cheaper. Energy exports will continue to dominate the current account. The services and income deficits will expand as energy and construction companies repatriate profits.


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