Algeria Records 4.5% Economic Growth in Q1 2025 Despite Hydrocarbon Setback

✍️ BY: Dr. Hana Saada

Strong domestic demand and diversified sector performance offset declining oil exports, according to ONS quarterly report

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Algiers, Algeria– Monday, July 14, 2025 | Algeria has reported a notable 4.5% growth in its national economy during the first quarter of 2025, according to the latest quarterly report titled “Quarterly National Accounts – First Quarter 2025” released by the National Office of Statistics (ONS). This upward trajectory is largely credited to strong domestic demand and robust performances in several non-hydrocarbon sectors, despite a notable downturn in the oil and gas industry.

The report reveals that the GDP excluding hydrocarbons grew by a significant 5.7% in Q1 2025, a marked improvement from 4.3% recorded during the same period in 2024. This performance indicates a steady diversification of Algeria’s economic base. Key sectors contributing to this progress include agriculture (+6.1%), food and tobacco industries (+5.6%), leather and footwear manufacturing (+15.4%), commerce (+8.9%), and transport and communications (+8.3%).

Meanwhile, domestic demand surged by 10.4% in the first quarter, up from 7.5% in Q1 2024. This jump was mainly driven by a 13.9% rise in gross fixed capital formation and a 4.7% increase in household consumption. These figures reflect growing investment and consumer confidence.

Despite this overall positive picture, the hydrocarbon sector experienced a 2.8% contraction. The added value generated by hydrocarbon extraction dropped by 1.5%, continuing a downward trend from 2024 (-1.1%). Refining and coking activities also declined sharply by 5.5%, compared to a 4.4% increase in the same period last year. As a result, the sector’s nominal value decreased to 1,429.7 billion DZD ($10.99 billion), down from 1,465.0 billion DZD ($11.26 billion) in Q1 2024.

Algeria’s trade performance was also affected, with exports of goods and services shrinking by 3.8%. The ONS attributes this to a 2.9% decline in hydrocarbon exports and a steep 13.4% plunge in non-hydrocarbon goods exports. Only service exports saw growth, increasing by 2.8%, reversing a 3.8% fall in 2024. In contrast, imports soared by 24%, driven primarily by a 26.3% rise in goods imports and a more moderate 5.0% increase in service imports.

On the production side, the industrial sector posted a 5.5% increase in value added, driven by strong results in the food and tobacco industry, leather and footwear, non-metallic mineral products (+9.9%), and textiles (+5.9%). However, the manufacturing of office machinery and IT equipment dipped slightly by 0.6%.

Electricity and gas saw 4.3% growth, down from 5.4% in 2024, while the construction sector increased by 3.1%, slightly below last year’s 3.3%. The construction sector’s nominal value rose from 1,182.0 billion DZD to 1,290.3 billion DZD, reflecting a 9.2% increase.

The services sector performed well, with a 5.3% rise overall. Noteworthy improvements were seen in commerce (+8.9%), transport and communication (+8.3%), and hospitality (+7.1%).

The report underscores that Algeria’s GDP in nominal terms stood at 10,047.4 billion DZD ($77 billion based on an exchange rate of 130 DZD/USD), marking an 8.0% increase from 9,303.8 billion DZD recorded in Q1 2024. Inflation, measured by the general price level, eased to 3.3% compared to 4.3% the year prior.

Public sector spending grew modestly, with final consumption expenditure by public administrations rising only 0.8%, a marked slowdown from 3.0% in Q1 2024. In contrast, household consumption rose 4.7%, showing a slight improvement over the 4.2% growth rate from the previous year.

Gross fixed capital formation reached 3,915.4 billion DZD in nominal value, up from 3,316.0 billion DZD in 2024, reflecting an 18.1% surge.

Despite challenges in the hydrocarbon sector and trade imbalances, Algeria’s economic momentum in Q1 2025 highlights a promising path toward diversification, improved investment, and sustainable growth.

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