Economy of Algeria
Economy of Algeria Last updated on Monday 19th April 2010
Prior to independence in 1962 Algeria's economy had been dominated by agriculture for a millennium and was known as 'the breadbasket of the Roman empire'. However, with rising oil revenues throughout the 1960s and 1970s, the government embarked on a major programme of industrialization which has transformed the economy, making Algeria one of the wealthiest nations in Africa. Fuelled by oil revenues, Algeria's economy grew dramatically throughout this period.
Declining oil prices during the 1980s drastically reduced economic growth of the now oil-dependent country. Annual per capita income fell from $2,360 in 1988 to $1,541 in 1992. As a socialist country, Algeria's entire oil industry is controlled by the state.
Although agriculture no longer dominates the economy it remains an important sector. During the first half of the 1990s the national budget registered expenditures of $14.6 billion as against revenues of $14.4 billion annually.
Accounting for roughly 52% of budget revenues, the hydrocarbons sector is the backbone of the economy (25% of gross domestic product [GDP] and over 95% of export earnings. Algeria has the fifth-largest reserves of natural gas in the world and is the second largest gas exporter. Regarding oil reserves, Algeria ranks fourteenth in the world. Algiers' efforts to reform its centrally planned economy stalled by the political turmoil erupted in the early nineties. Some progress on economic reform and oil and gas sector expansion contributed to a recovery in growth since 1995. Still, the economy remains heavily dependent on volatile oil and gas revenues. The government continued its efforts to diversify the economy by attracting foreign and domestic investment outside the energy sector, but unemployment and improving living standards have not successfully dealt with.