Algeria: Expansion across the board
En Français
A rise in Algeria’s imports and exports in 2011 has strengthened the country’s trade position considerably. Data from the National Centre for Customs Information and Statistics (Centre National de l’Information et des Statistiques des Douanes, CNIS) show an expansion across the board in 2011, with exports outpacing import growth over the year, boosting Algeria’s financial position. Provisory CNIS year-end data indicate that the annual trade surplus reached €20bn in 2011, a 62.46% year-on-year (y-o-y) increase.
Rising export revenue is largely due to the improved performance of the oil and gas sector. While the country’s volume of oil exports decreased slightly by 4.89% in 2011, rising global oil prices buoyed the overall economy. Revenue from 2011 hydrocarbons exports increased by 27.3% y-o-y to reach €53.1bn. The OPEC price basket, which includes Algeria’s Saharan Blend, averaged $107.46 per barrel in 2011, a significant increase from prices during the trough of the economic downturn, which dropped to $61.06 in 2009 and rose slightly to $77.45 in 2010.
Strong oil and gas exports are expected to continue in 2012. The OPEC price basket reached an average of $111.76 per barrel in January, and uncertainty in Libya and Iran are likely to continue to support higher oil prices in the first part of the year.
Algeria budgeted conservatively in 2011, so the uptick in oil and gas revenue allowed it to increase foreign reserves and pay down debt. The governor of the Bank of Algeria, Mohamed Laksaci, noted in the local press that Algeria’s foreign exchange reserves climbed to €135.3bn by year-end, placing it on solid financial footing heading into 2012.
One challenge to further growth in Algeria’s energy sector, however, is that foreign interest in oil and gas ventures has declined slightly in recent years, due to a variety of factors, including lower capital investment levels worldwide from international oil corporations and tighter regulation in the sector. Algeria is conducting a review of its finance laws in an effort to reinvigorate investment, which will be necessary to maintain current production and export levels.
In spite of the hefty contributions of oil and gas to the country’s overall GDP, there has been cause for celebration outside of the energy sector, as Algeria’s diversification strategy slowly begins to bear fruit. Non-hydrocarbons exports, while still negligible at less than 3% of total outbound trade, showed dynamic growth in 2011, continuing an upward trend since 2009. Non-hydrocarbons exports generated €1.2bn in the first three quarters of 2011, according to Ministry of Commerce figures, an increase of over 40% y-o-y.
Semi-finished products continue to drive the sector, contributing 73.66% of non-hydrocarbons exports in the first three quarters of 2011. Among these, the highest-performing exports are petroleum-derived products, with production of solvents and other coal tar-derived products reaching 442,500 tonnes and generating €449m in revenue. The production of ammonia increased significantly; exports reached 507,860 tonnes by September 2011, generating €191m, and CNIS year-end data estimates that ammonia exports expanded by 91.38% compared to 2010.
Food products are the second most important source of non-hydrocarbons exports, representing 16.7% of outgoing trade in the first three quarters of 2011. Sugar production increased significantly over the year, bringing in €150.2m by September. The quantities of other export-oriented agricultural products, including dates, tomato paste and olive oil, remained relatively small, with stagnant growth year-on-year.
The government is introducing subsidies and other incentive programmes in an effort to boost agricultural investment and production, which may help to reverse this trend in coming years. Promising growth was also seen in phosphates, which reached 910,870 tonnes and generated €67.3m in revenue by September 2011. CNIS data indicates that the increase in phosphates led a 70% y-o-y increase in overall raw goods exports.
Algeria’s imports also grew by a projected 14.78% in 2011. Part of this growth is due to a government policy to step up food imports, particularly wheat, in response to January protests over rising consumer costs. This move was likely a one-time measure, which runs contrary to the government’s effort to reduce import dependence.
However, real growth was seen in imports of industrial equipment, which represented more than one-third of the total. In a promising sign for the local economy, more than 2m vehicles were imported between January and September. Among semi-finished products, which represented 23% of imports, 1.7m tonnes of construction materials such as bars, tubes and pipes made of iron and steel were imported in the first three quarters, for a total of €1.45bn.