The International Monetary Fund (IMF) has concluded its Article IV consultations with Algeria, praising the country's steady economic growth while highlighting concerns over high budget and trade deficits. In 2025, Algeria's real GDP grew by 3.9%, following 3.7% in 2024. The IMF forecasts growth to reach 3.8% in 2026, before slowing down to 3.1% in 2027 and 3% in 2028 and 2029.
Algeria's non-hydrocarbon sector is expected to continue growing positively, with an estimated 4.3% growth in 2025 and a projected 4% in 2026. This growth is expected to slow down to 3.6% in 2027 and 3.3% in 2028. The sector's growth will likely stabilize around 3% in the following years. Meanwhile, inflation has started to rise, increasing from -2% in September 2025 to 5.2% in April 2026.
The IMF attributes the rising inflation to the end of food product deflation and a significant increase in jewelry prices due to the surge in gold prices. The institution forecasts an average inflation rate of 5.5% in 2026, down from 1.4% in 2025. Inflation is expected to decrease to 3.5% in 2027 and stabilize around 3.8% between 2028 and 2031.
Algeria's budget deficit is expected to remain high, reaching 9.6% of GDP in 2026, after 10.5% in 2025. The IMF predicts a deficit of 10.2% in 2027, 10% in 2028, and 9% in 2029, before a slight reduction to 8.7% in 2030 and 2031. The country's public debt is estimated to have reached 52.1% of GDP in 2025 and is expected to increase to 53.2% in 2026 and 79% in 2031.
The IMF also expresses concerns over Algeria's external sector, with a current account deficit of -8.9% of GDP in 2025. The institution forecasts a deficit of 1.9% in 2026, before it worsens to -2.5% in 2027 and -3.1% in 2028. The country's international reserves have decreased, from $68.9 billion in 2024 to $51 billion in 2025, and are expected to further decline to $19.8 billion in 2031.
The hydrocarbon sector remains crucial to Algeria's economy, with an expected growth of 2.7% in 2026. However, the sector is predicted to contract by 0.8% in 2027 and 0.1% in 2028. The IMF projects a price of $71.8 per barrel for crude oil in 2031. The institution emphasizes that higher hydrocarbon prices will boost exports and budget revenues.
The IMF recommends that Algeria implement policies to rebalance its economy, including a gradual and credible consolidation of public finances. The institution also suggests that the country pursue structural reforms to increase resilience, support diversification, and promote private sector-driven growth. KEY_POINT: Algeria's economic growth is expected to remain steady, but high deficits pose significant challenges. KEY_POINT: The country's hydrocarbon sector remains crucial to its economy. KEY_POINT: The IMF recommends policies to rebalance Algeria's economy and promote private sector growth.
