Knowledge Note

"Algeria’s long-term growth performance is slowing down, driven by a shrinking hydrocarbon sector, a winded public-led growth model, and an underdeveloped private sector."

The COVID-19 pandemic and concurrent crash in oil prices endangered Algeria’s vulnerable macroeconomic environment, and the new authorities are now grappling with a multifaceted crisis. Swift lockdown measures have helped slow down the pandemic, severely affecting activity in the meantime. The sharp fall in global hydrocarbon prices and demand added to the sector’s difficulties, cutting further into the hydrocarbon rent. Therefore, swift action to curb the twin deficits and structural reforms to foster private-led growth have only become more urgent.