Macroeconomic Forecast Algeria

We maintain our long-held view that government subsidies will be successful in containing inflationary pressures, and forecast consumer price inflation to average 4.0% in 2011 and 3.0% in 2012. We caution, though, that the government's ambitious spending plans announced for 2011, coupled with relatively limited resources, pose upside risks to our inflation forecasts, especially should prolonged protests cause disruptions in Algeria's hydrocarbons production cycles in the coming months.

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