Stagnation or Growth? Algeria’s development pathway to 2040

The report identifies poor governance, hydrocarbon dependence, and an unsustainable subsidy system as primary barriers to Algeria's growth. It projects a modest GDP growth rate of 1.8% between 2020 and 2040 under the 'Current Path' but proposes an 'Algerian Dream' scenario based on four reform pillars: improved governance, economic transformation, investment in the knowledge economy, and a transition to sustainable agriculture and renewable energy.

• The economy is heavily dependent on hydrocarbons, which account for nearly 30% of GDP, 65% of budget revenues, and over 85% of exports. This dependence makes the country vulnerable to oil price volatility and has hindered economic diversification.
• Algeria maintains an extensive and unsustainable subsidy system for food, energy, and water. While these subsidies have ensured social stability, they create price distortions, encourage smuggling, and primarily benefit the middle and upper classes rather than the poor.
• The country faces severe water stress and vulnerability to climate change. Northern Algeria has already seen a temperature rise of 0.5 °C, and future warming is expected to reduce agricultural yields and freshwater availability.
• There is a significant mismatch between the skills produced by the education system and the needs of the labour market, contributing to high unemployment. While primary education is universal, there are significant 'leakages' in the secondary system.
• Algeria's trade is heavily skewed toward the European Union, despite high trade complementarity with the Maghreb region. Intra-regional trade in the Maghreb is among the lowest in the world, at approximately 5% of total trade.
• The informal economy is pervasive, with an estimated 57% of Algerians engaged in informal activity, contributing approximately 40% to the GDP.
• The report's 'Algerian Dream' scenario suggests that combining reforms in governance, economic diversification, knowledge investment, and sustainability could make the economy €103.2 billion larger by 2040 compared to the Current Path.

APA

Cilliers, J., & Kwasi, S. (2023). Stagnation or Growth? Algeria’s development pathway to 2040. Institute for Security Studies. https://futures.issafrica.org/special-reports/country/algeria/

Chicago

Cilliers, Jakkie, and Stellah Kwasi. Stagnation or Growth? Algeria’s development pathway to 2040. Institute for Security Studies, 2023. https://futures.issafrica.org/special-reports/country/algeria/.

Wikipedia

{{cite report |last1=Cilliers |first1=Jakkie |last2=Kwasi |first2=Stellah |title=Stagnation or Growth? Algeria’s development pathway to 2040 |publisher=Institute for Security Studies |date=8 June 2023 |url=https://futures.issafrica.org/special-reports/country/algeria/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cilliers2023stagnation, author = {Cilliers, Jakkie and Kwasi, Stellah}, title = {{Stagnation or Growth? Algeria’s development pathway to 2040}}, institution = {Institute for Security Studies}, year = {2023}, month = jun, url = {https://futures.issafrica.org/special-reports/country/algeria/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }