Macroeconomic Forecast Algeria

February 2007 | Macroeconomic Forecasts

We expect real GDP to stay above the 4% mark over the forecast period, bolstered by expansionary fiscal policy and the infrastructure development programme. Certainly, while continuing to ease - we forecast the OPEC basket price will dip slightly this year to US$54.5/bbl down from US$60.9/bbl in 2006 - historically high oil prices will provide the financial stimulus required. As such we see Algeria maintaining its external account and the budget balance in positive territory. However, inflationary pressures are building - the CPI index came in at 5.6% y-o-y in October, the highest since 2004 - and may begin to hurt domestic consumption and erode the competitiveness of the non-oil sector.

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