Scotsman Guide > Commercial > January 2019 > Department

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Commercial Department: Beyond Our Borders: January 2019

 

Beyond Our Borders

Algeria, an African nation that gained its independence in 1962 following a protracted battle with France, is now the 33rd-most populous country in the world, with nearly 41 million citizens as of July 2017. The vast majority of Algerians are Berbers, with Arabic and Berber serving as the country’s two official languages, according to the CIA World Factbook.

The nation’s economy was historically built on socialist principles and is still largely under governmental control as lawmakers have halted recent efforts to privatize some state-run industries. The nation is highly dependent on hydrocarbons, which accounted for about 30 percent of its $633 billion gross domestic product (GDP) as of 2017.

Algeria has the world’s 10th-largest natural gas reserves and the 16th-largest oil reserves. Declining oil prices of late, however, have hampered the government’s ability to subsidize public housing and may be contributing to modest tax increases for items like alcohol, cigarettes and gasoline.

Algeria’s total exports — largely consisting of natural gas and petroleum products — grew to $33 billion in 2017. Exports to Italy, Spain, France and the United States account for about half of that figure.

The nation’s annual GDP growth rate dropped from 3.8 percent in 2015 to 1.7 percent in 2017, the World Bank reported. Its unemployment rate rose from 10.5 percent in 2016 to 11.7 percent in 2017, and 23 percent of the population, or about 9 million people, live below the poverty line, according to the CIA World Factbook.

In a report released this past June, the International Monetary Fund (IMF) recommended that Algeria continue gradual fiscal-consolidation efforts and that its central bank should “stand ready to tighten the monetary-policy stance if inflationary pressures emerge.” The IMF estimated that annual inflation would rise to 7.6 percent in 2019, up from 6.5 percent as of this past October.

Algeria’s military, intelligence services and other groups have long engaged in a tug of war for political power. Abdelaziz Bouteflika, who has served as president since 1999, will run for a fifth term in 2019. He fired several key military officials last year in an apparent attempt to limit the military’s role in government, Reuters reported.

According to real estate services company JLL, several multinational companies have shown increased interest in Algeria of late due to its proximity to other African and European markets. The nation is poised to diversify its economic base by investing in employment sectors such as construction, telecommunications and tourism, and the clearest opportunities for real estate investors appear to be in residential, hotel and office properties, JLL reported.

Cultural tourism also is on the rise in Africa, JLL reported, so countries like Algeria could take advantage of a “boom in demand for lifestyle hotels,” which are located in trendy neighborhoods or historic towns and deliver a fresh appeal to millennial consumers.


 

Neil Pierson is editor in chief of Scotsman Guide Media. Reach him at neilp@scotsmanguide.com or (800) 297-6061.

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