Algeria is a key producer of hydrocarbons in Africa, ranking first in gas output and among the top three for oil. It depends on the sector for the majority of government revenue and nearly all exports. Despite reforms to encourage private sector development, promote diversification and attract FDI, the state plays a preponderant role, meaning that changes to government expenditure and investment continue to have a large impact on economic performance.
Reaching a population of 42.3m by the end of 2018, Algeria is the second-largest country in North Africa after Egypt. The country is one of Africa’s most important producers of hydrocarbons and enjoys large reserves of shale oil and gas not commercially exploited. Although Algeria enjoys a relatively closed economy, it holds close trading links with its Mediterranean neighbours to the north, and is an important source of natural gas imports to the EU, particularly to France, Spain and Italy. Given oil continues to be the main driver of Algeria’s economy, the country’s long-term challenge remains to further diversify the economy and seek more stable sources of income, while better translating its oil and gas revenues into broadly shared improvements in living standards.
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