ALGIERS, December 4, 2025 - Algeria's economy expanded by 4.1 percent in the first half of 2025, with GDP growth expected to reach 3.8 percent for the year. Non-hydrocarbon sectors expanded by 5.4 percent, while inflation eased to 1.7 percent over the first nine months of the year, driven by decreasing food prices and supported by a stable exchange rate, according to the World Bank's Fall 2025 Algeria Economic Update.
Momentum has been maintained by steady gains in industries and services outside hydrocarbons. At the same time, hydrocarbon exports decreased, while imports rose, reflecting investment demand. However, these trends created pressure on external accounts, and hydrocarbon revenues remain below earlier levels, highlighting the importance of ongoing efforts to mobilize revenues and improve public spending efficiency.
"As Algeria works to strengthen competitiveness in a changing global environment, the country can build on recent gains and continue moving toward faster private-sector-led growth that creates quality jobs and supports innovation. Clear and predictable policies, together with measures that encourage investment and innovation, can sustain progress and reinforce competitiveness," said Cemile Hacibeyoglu Ceren, World Bank Group Resident Representative for Algeria.
Looking ahead, growth outside hydrocarbons is expected to remain dynamic, with some moderation in 2026-2027. GDP growth is projected at 3.5 percent for 2026 and 3.3 percent in 2027. Sustained implementation of reforms, especially those that improve the business environment, expand access to finance, and strengthen competition, will be key to supporting diversification and job creation.
"Easing price pressures and solid non-hydrocarbon activity are encouraging. Maintaining this progress through continued reforms can help support stronger, sustainable, and diversified growth," said Daniel Prinz, World Bank Economist for Algeria.
The report also notes the importance of integrating climate considerations into development planning to support competitiveness as partner countries advance decarbonization efforts, including the introduction of the European Union's Carbon Border Adjustment Mechanism (CBAM) next year.
