Algeria’s economic outlook “positive,” despite challenges

January 8th, 2018

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APS : Friday, 05 January 2018

LONDON- The economic outlook remains “positive” for Algeria despite the challenges caused notably by the decline in State revenues due to the fall in oil prices since 2014,
affirmed British Group Oxford Business Group (OBG).
In a review on Algeria’s economy in 2017 published in past week, OBG said that a recent survey of CEOs it conducted revealed that “61% of them were either positive or very positive in their expectations of business conditions in the coming 12 months.”
According to the same survey, “70% said it was either likely or very likely that their company would make significant capital investments in 2018.”
Regarding to the recent changes to Algeria’s tax regime, a majority of respondents have however rated the tax environment as “uncompetitive or very uncompetitive.”
“While helping to bolster state coffers, there are concerns recently implemented taxes could curb private sector consumption in some segments, especially with the new round of tax increases and price rises set to come into force in 2018,” said OBG.
The group moreover, stressed that a stronger energy earnings, efforts to curb imports and increased tax revenue saw Algeria’s economy move onto a “more solid” footing in 2017.
The government aims to reduce the value of imports to $30bn in 2018 – down from the $41bn expected this year – by promoting greater self-sufficiency and increasing the number of products subject to import restrictions, it reported.
The Group OBG underlined that a positive return from the energy sector continued to drive growth this years, but warned that the “country’s ongoing reliance on hydrocarbons revenue continues to leave it exposed to external shocks.”
The group in its preview indicated that “while the improved performance of the energy sector, which funds around 60% of the state budget and accounts for 95% of exports, is set to support overall economic growth moving forward, weaker earnings in the years following the 2014 decline in oil prices continue to weigh on the economy.”
In this regard, the British Group recalled the efforts of the Algerian government to cope with the fall in revenues and liquid reserves witnessed in past years, notably the measures aiming at extending the real backbone of the economy and the increase of taxes on goods and services.
The government plans to boost outlays by 25% next year, following cuts of 14% and 9% in 2017 and 2016, respectively, with much of the fresh expenditure to be directed towards restarting stalled infrastructure developments, the OBG said as a conclusion.