Algeria

Menas’s consultants and in-country experts have been covering Algeria for the past 16 years, providing high quality analysis and assessment of key trends in a country confronting significant political and economic change.

The Forecast, 2018

Below is a summary of The Forecast: Algeria 2018 – download the pdf version of the document here:

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Domestic politics and policy
Two issues are likely to dominate the political scene during 2018:

  1. The presidential succession: Assuming that the ailing President Abdelaziz Bouteflika is still alive at the time of the May 2019 presidential election, the big question is whether he will run for a fifth term, or step down for his younger brother, Saïd Bouteflika, to stand in his place.
  2. The economy: How it and the Algerian people will react to Prime Minister Ahmed Ouyahia’s policy of ‘unconventional finance’ — that is, printing money — which was put into effect at the end of 2017. The strategy’s success or failure will have a major bearing on the 2019 elections.
Security

We do not expect any significant upturn in domestic militancy in Algeria — which has been relatively calm during 2017 — although social unrest could increase and become serious if Ouyahia’s experiment leads to spiralling inflation.

While the security threat from Libya is low, there are potential problems on Algeria’s Sahelian borders.

International Affairs
Algeria will maintain its neutrality in the Libyan conflict to bring peace, but Algeria and Morocco will continue to spar diplomatically, with little likelihood of either side endangering their own security.

Although the EU is exasperated with Algeria’s lack of political reform, it will continue to strive for political stability, for fear of destabilisation and a surge of Algerian migrants. The EU, and especially France, will continue to push for a greater opening up and diversification of Algeria’s economy.

Economy

The economy is precariously balanced. Oil should trade above US$50 a barrel, which is the base price set for the 2018 budget, but the high risk strategy of printing money to resolve the financial crisis could lead to rising inflation and social unrest.

Energy

Production increases in 2018, especially of gas, will be largely offset by rising domestic energy demand, which will pressure the government to accelerate the underdeveloped renewables sector. Prime minister Ouyahia’s recent call for the renewal of the shale gas E&P programme is unlikely to materialise, at least for a long time.

Other industry

Concerns about corruption, the opacity of policy formation, the manipulation of the judiciary, and the arbitrary nature of decision-making are all interrelated examples of political issues that negatively impact the economy.

Although the economy has proved responsive to many of the reforms, the significant test will now be whether more reforms can follow.

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