Algeria recovered its Gross Domestic Product (GDP) growth to pre-pandemic levels in the fourth quarter of 2021, driven by increased production and exports of hydrocarbon resources, according to a new report by the World Bank entitled ‘Strengthening resilience in favorable times’ which analyzes the country’s economic growth.
While factors such as a decline in job creation, agricultural and manufacturing activities negatively impacted Algeria’s economy, the continued increase in oil and gas prices at a global scale enabled the north African country to stabilize its foreign currency reserves and offset budget deficit in various sectors of the economy. The report states that revenues from exporting hydrocarbon resources in Algeria increased by 36%.
“Algeria’s economic recovery will continue in 2022, notably supported by the return of nonhydrocarbon sectors to pre-pandemic levels of activity. Hydrocarbon exports are also expected to remain at a high level, generating a current account surplus and a marked increase in fiscal revenues. However, a projected decline in hydrocarbon export prices and volumes in 2023-24, in a context of uncertainty surrounding the evolution of the global economy, could lead to a gradual deterioration in external and budget balances,” according to the report.
The projection comes as Algeria is recording an influx in deals signed to boost energy production and exports to Europe as the bloc seeks to diversify gas supplies away from Russia. In April, Italian major, Eni, signed a deal with Algerian National Oil Company, Sonatrach, to increase volumes of gas exports from Algeria to Europe via the TransMed / Enrico Mattei pipeline to up to 9 billion cubic meters per year in 2023-24.
The deal followed the two parties agreeing to enhance cooperation on oil and gas exploration and production in various blocks including in 404 and 208, resulting in the discovery of around 140 million barrels of oil in the Zemlet el Arbi concession in the Berkine North Basin, onshore Algeria in March and significant oil and gas reserves in the Sif Fatima II concession in late July this year.