This country profile was published in November 2008 in our annual 'Africa in 2009' issue. The next edition, 'Africa in 2010' will be on sale 23 November 2009.

Click on the drop-down menu above to see Algeria's Top Companies and Top Banks. 

Major infrastructure works launched at the beginning of the decade, thanks to the inflow of petrodollars and the second economic plan (costed at $55bn between 2004-2009), have begun to change the face of Algeria. The capital city is expecting its metro to open in 2009, and the buildings destined to put an end to the housing crisis are growing like mushrooms in the suburbs. The railway network is being renovated, and the gradual opening of new slices of the east-west motorway (costing $9bn), which should be fully completed come 2010, is already shrinking the distance between the coastal cities.

The influence of these investments on economic growth can only increase in the years to come but, for many analysts, they will not bring economic transformation. To hit their full potential, and to help Algeria wean itself off dependence on oil, they should have been linked to greater investments in human resources - which, according to local employers, are poorly developed. Diversification in agriculture and industry would also have helped to avoid importing inflation caused by the worldwide hike in oil prices, in a country which imports nearly all of its food.

Rather than looking beyond the oil economy, the government is primarily focused on the price of oil, which started to fall as the credit crunch played out. "At $70 a barrel, we will be in danger, at $60 a barrel, things will be bad, at $50 a barrel, things will be very bad," commented prime minister Ahmed Ouyahia in September. The promise of the Algerian market has attracted many investors, but for the government, these have not brought the desired benefit for local people, so the government has tightened foreign investors' entry criteria.

Another of Algeria's apparent strengths has been the management of its huge foreign exchange reserves, which were estimated at $133bn in October 2008. While the financial crisis was at its peak, finance minister Karim Djoudi declared that Algeria was sheltered from the turbulence in the short term, thanks to its "prudent financial management" which in reality meant buying up US treasury bills, a less risky option than the investment strategies of sovereign wealth funds, a route that has always been rejected by President Abdelaziz Bouteflika. In the opinion of Algerian commentator Abed Charef: "Algeria will emerge unscathed from this crisis not thanks to the initiatives of the government, but precisely because of its lack of initiative, because it is disconnected from the world. Its economy is outside history."

Real GDP growth projections for 2008 and 2009, at 4.9% and 4.5%, are lower than might have been expected. Caught between economic indicators and continuing gloom, Algerians often suggest that “everything is changing so that everything can stay the same. Rarely have the attempts at clandestine emigration by sea been so often reported by the press and these are seen as a humiliation by Algiers. The people who have had no benefit from the impressive growth statistics are often followed abroad by those whose social position is considerably better, stealing skills away from the country. The best example of an unchanging Algeria is at the summit of the state. A partial amendment of the constitution has been announced by Bouteflika, who will run for a third term in April 2009.