Algeria’s Economy Strengthens Its Recovery, World Bank Reports
✍️ BY: Dr. Hana Saada
Algiers – December 2025 – Algeria’s economic recovery continues to solidify, according to the latest report from the World Bank (WB). Economic indicators for 2025 underscore a resilient trajectory, with the country recording a growth rate of 4.1% in the first half of the year, while the gross domestic product (GDP) is projected to expand by 3.8% for the full year.
The growth momentum is primarily driven by non-hydrocarbon sectors, which have expanded by 5.4%, signaling an increasingly diversified productive base beyond oil and gas revenues, highlighted economists Amel Henider and Daniel Prinz during a presentation of the World Bank’s Autumn 2025 economic monitoring report in Algiers, ahead of its official publication this Thursday.
Inflation has simultaneously receded to 1.7% over the first nine months of the year, supported by falling food prices and a stable exchange rate, which has helped preserve purchasing power and mitigate social tensions. The report emphasizes that this positive development rests on sustained growth in industrial and non-hydrocarbon service sectors, even as hydrocarbon exports have declined and imports increased, largely due to investment needs.
Looking ahead, the World Bank projects GDP growth at 3.5% in 2026 and 3.3% in 2027, reflecting a gradual consolidation of macroeconomic stability. While external balances face less favorable conditions, hydrocarbon revenues continue to provide fiscal space, allowing the state room for maneuver. Economists stress the necessity of maintaining reform efforts to improve public spending efficiency and enhance investment effectiveness. Continued robust non-hydrocarbon activity is expected, albeit with a slight moderation in 2026–2027.
The report identifies several encouraging signs for sustainable and inclusive growth. Reduced price pressures and persistent performance in non-hydrocarbon sectors indicate a more resilient and equitable expansion across the economy. Achieving this trajectory, the World Bank warns, requires the government to deepen reforms—modernizing budgetary management, refining expenditure targeting, and fostering a more competitive business environment to support diversification and job creation.
A significant section of the report is dedicated to climate considerations and their integration into development policies. The World Bank underscores that advancing a low-carbon transition is essential to preserving Algeria’s competitiveness, particularly as major trading partners accelerate decarbonization strategies. This adaptation becomes increasingly urgent with the European Union’s forthcoming full implementation of the carbon border adjustment mechanism, which may increase costs for exporters who fail to sufficiently reduce emissions.
The World Bank’s findings send a clear signal: Algeria’s economic resilience is strengthening, but the continuity of reforms, coupled with strategic adaptation to global climate and market pressures, will determine whether this recovery evolves into sustainable long-term growth.
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